UBS senior research analyst Michael Lasser used a CNBC appearance Thursday morning to reframe the narrative around Walmart (NYSE:WMT | WMT Price Prediction) after the retailer’s fiscal Q2 report landed with a soft same-store sales number. The stock is currently down 10% following the report, trading around $103.08 on Thursday.
Same-store sales grew only 2.6%, roughly one point below estimates, and the forecast was underwhelming. Lasser believes the miss reflects a broadening squeeze on lower-income households while Walmart continues to take market share.
He is sticking with a buy rating, arguing that the same components that drove the stock to record highs still exist today.
Walmart’s Three-Part Bull Case
Lasser laid out the structure of the long thesis on air: “What has driven the stock over the last year and a half to this all-time new level and at a premium valuation is threefold. One, a stable core business where Walmart sells one out of every five grocery dollars in the United States. Two, automation and technology that’s going to make the business much more profitable. And three, rolling in new revenue streams that are very high margin.”
The high-margin flywheel is still spinning at scale. “Its eCommerce grew 24% in the U.S. Its advertising business grew 38% in the U.S. These are very comfortable growth levels that continue to support the bull case on this stock,” Lasser said. Global eCommerce now represents 24% of total net sales, and membership fee revenue grew 17% globally.
Why Dollar Stores Will Benefit from Consumers Under Pressure
Walmart U.S. comps decelerated from +4.1% in Q1 and +4.6% in Q4 FY26 to +2.6% in Q2 FY27. Management again noted that share gains continued across categories and income tiers, led by upper-income households, echoing a pattern that has held for four straight quarters.
Lasser pointed to macro evidence supporting his thesis that lower-income shoppers are driving the shortcomings: “In the last 4 to 8 weeks, we have seen a growing number of data points to suggest the low-income consumer is feeling the collective burden of a variety of pressure points, including these elevated gas prices.”
The national average for regular gasoline sat at $4.05 per gallon on August 17, 2026, up 5.0% over the past month, above the $4 threshold the series flags as painful for household budgets. University of Michigan consumer sentiment printed at 49.5 in June 2026, still below the recessionary threshold of 60.
Lasser expects dollar stores to benefit from weakening consumers: “The other notable point that we’re going to see is very likely that the dollar stores, Dollar General, Dollar Tree, are going to have accelerated their growth from the first to the second quarter. These are all signals that the consumer is changing their behavior to try and deal with what is a more difficult situation for that cohort.”
Walmart’s Next Move Could Pressure Profits
Walmart’s Q2 gross margin rate expanded 96 basis points to 25.4%, largely on tariff refunds. Management plans to reinvest those benefits into customer pricing and experience in the second half, which is expected to pressure Q3 operating income growth to 2.0%-4.0% in constant currency. That sets up the tension Lasser is watching: whether Walmart eventually diverts profit dollars from advertising, marketplace, and membership to defend its stable grocery core.
Walmart raised full-year guidance to constant-currency net sales growth of 4.0%-5.0% and adjusted EPS of $2.80-$2.87. Q2 adjusted EPS came in at $0.81 versus a $0.7413 consensus, on revenue of $187.94 billion.
Key Takeaways
Walmart’s weaker comparable sales appear to reflect growing pressure on lower-income consumers rather than a loss of competitive strength. The company is still taking market share while e-commerce, advertising, and membership revenue grow at double-digit rates.
The key question is whether Walmart can protect those gains without reinvesting so aggressively in prices that its expanding high-margin businesses fail to translate into stronger profits.
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