Walmart Inc. (WMT) had investors doing a double-take on Thursday. The retail giant delivered a solid quarter that topped expectations, but its fiscal 2027 outlook came in lighter than Wall Street wanted, creating some morning volatility in the stock.

The Numbers That Matter

Let's start with the good news. Walmart reported adjusted earnings of 74 cents per share, edging past analyst expectations of 73 cents. Revenue climbed 5.6% year-over-year to $190.70 billion, beating the consensus estimate of $190.43 billion. In constant currency terms, that's a 4.9% increase.

The company's gross margin improved by 13 basis points, driven primarily by strength in its U.S. operations. Adjusted operating income jumped 10.5% year-over-year. On the cash flow front, Walmart generated $41.6 billion in operating cash flow and $14.9 billion in free cash flow for the full year.

The balance sheet showed $10.7 billion in cash and equivalents at quarter-end, against total debt of $51.5 billion.

Where the Growth Is Coming From

Walmart U.S. posted revenue growth of 4.6% year-over-year to $129.2 billion. The real story here is digital: e-commerce sales exploded 27% higher, powered by store-fulfilled pickup and delivery services, plus continued momentum in advertising and marketplace operations.

The International segment delivered an 11.5% revenue increase to $35.9 billion, with Flipkart, China, and Walmex leading the charge. Transaction counts and unit volumes improved across international markets.

Sam's Club U.S. grew revenue 2.9% to $23.8 billion, supported by strength in grocery and general merchandise categories along with continued market share gains.

Digital Dominance and Advertising Boom

Comparable sales in the U.S. rose 4.6% year-over-year excluding fuel, while Sam's Club posted even stronger comps growth of 6.8% on the same basis.

Here's where things get interesting: global e-commerce sales jumped 24% year-over-year, driven by the store-fulfilled model and marketplace expansion. But the real standout was advertising. Walmart's global advertising business, including VIZIO, surged 37% year-over-year. Walmart Connect specifically grew 41% in the U.S., showcasing how the company is monetizing its massive customer traffic in new ways.

Membership income also continued its upward trajectory, with global membership fee revenue climbing 15.1% year-over-year.

Returning Cash to Shareholders

Walmart raised its fiscal 2027 annual dividend to 99 cents per share, up 5% from 94 cents. This marks the 53rd consecutive year of dividend increases, an impressive streak that puts the company in an elite category. The dividend will be paid quarterly at 24.75 cents per share.

The company also repurchased $1.1 billion worth of shares during the quarter and announced a fresh $30 billion share buyback authorization.

What the CEO Is Seeing

During the earnings call, Walmart's CEO painted a nuanced picture of the consumer landscape. Overall U.S. spending remains resilient, but there's clear segmentation happening. Households earning below $50,000 continue facing financial pressure, leading to more selective, value-focused shopping behavior.

Interestingly, the majority of Walmart's market share gains in the fourth quarter came from higher-income households earning above $100,000. These consumers are engaging more with Walmart even as they become increasingly "choiceful" about discretionary purchases. It's a sign that Walmart's value proposition is resonating across income levels, but the financial strain on lower-income segments remains real.

The Guidance That Spooked Markets

Here's what created the volatility: Walmart projects fiscal 2027 adjusted earnings of $2.75 to $2.85 per share, below the analyst consensus of $2.96. Revenue guidance of $731.12 billion to $738.19 billion also came in under the Street estimate of $748.06 billion.

For the first quarter, the company expects adjusted earnings of 63 cents to 65 cents per share on revenue of $169.74 billion to $171.38 billion.

Despite the cautious outlook, Walmart shares traded up 0.81% at $127.64 in premarket trading Thursday.