Let's start with the number that should make you do a double take.

Walmart is worth $1 trillion. The same Walmart where you buy store-brand cereal and return things without a receipt. The same company that competes on price for toilet paper and sells $3 rotisserie chickens. It now sits in the same market cap stratosphere as Apple, Microsoft, and Nvidia.

And tomorrow morning, before the market opens, we find out whether the people who bid it there are geniuses or optimists who got carried away.

The Valuation Problem

Here is the number that keeps analysts up at night: Walmart is currently trading at roughly 45x forward earnings. For context, the S&P 500 historically trades around 16-18x. Even fast-growing tech companies often justify 30-35x. Walmart, a company that moves physical goods through physical stores, is priced like a high-growth software business.

So either the market is pricing in something that hasn't fully shown up in the financials yet, or this is one of the most stretched valuations in retail history. Tomorrow's earnings will begin to answer that question.

The Walmart Connect Story: Why Wall Street Suddenly Thinks This Is a Tech Company

If you want to understand the trillion-dollar valuation, you need to understand Walmart Connect.

Here is the parallel that makes it click. Amazon built one of the most profitable advertising businesses on the planet by letting brands pay to appear in front of shoppers who are already actively looking to buy something. Search-intent advertising — showing an ad to someone who just typed "running shoes" into a search bar — converts at dramatically higher rates than social media ads or display banners. Amazon figured out it was sitting on a goldmine and built a multi-billion-dollar ad business on top of its retail operation.

Walmart is running the same playbook. With 255 million customer visits weekly across stores and digital channels, Walmart Connect allows brands to buy targeted ad placements against that proprietary shopper data — both online and, increasingly, on the screens inside physical stores. The margins on advertising are in a completely different league from selling groceries. A grocery sale might generate 2-3% margin. An ad placement can generate 50-70% margin.

This is the hidden engine behind the trillion-dollar multiple. If Walmart Connect continues growing and taking advertising dollars from both Silicon Valley platforms and Amazon, Walmart isn't a retailer trading at 45x — it's a media and data platform that happens to also sell things. That reframing justifies an entirely different valuation framework.

Tomorrow's earnings call will include an update on Walmart Connect revenue growth. Watch the trajectory carefully. If it's accelerating, bulls have their argument. If it's slowing, the premium gets significantly harder to defend.

What Same-Store Sales Actually Tell You

Beyond the advertising narrative, same-store sales are the simplest gut-check on whether the U.S. consumer is holding up. Analysts are watching for growth in the 3-4% range. Anything significantly below that signals the consumer is pulling back — and at a $1 trillion valuation, even a hairline crack in that story will matter.

Pay close attention to what management says about tariff exposure. Walmart sources enormous quantities of goods from international suppliers. If executives signal that tariff costs are eating into margins or forcing price increases on customers, that is a forward-looking warning flag. A consumer health story can turn into a margin compression story very quickly.

E-commerce performance against Amazon is the other number worth tracking. Walmart's digital growth has been impressive, but the gap with Amazon remains wide. Any sign of digital deceleration undercuts the tech-company narrative that underpins the premium multiple.

The Bottom Line for Investors

At 45x forward earnings, Walmart has no room for disappointment. This is a stock priced for a clean beat, strong guidance, and continued momentum in its high-margin advertising business. If those three boxes get checked tomorrow morning, the valuation might be defensible. If even one misses — especially if tariff guidance spooks the market — you could see sharp multiple compression on a stock that millions of retail investors own through index funds without fully realizing how expensive it has become.

Walmart has earned its status as the ultimate bellwether for the American consumer. Right now, it has also become a test case for whether the market's appetite for tech-like premiums on non-tech businesses has any limit at all.