Mad Hedge Technology Alerts!
Walmart’s (WMT) shares are up year to date and that is quite an achievement in the stock trading environment we are in.
This company is pretty much an e-commerce company in 2025, and its future is bright.
Walmart isn’t a traditional tech company, but it is turning into the closest competitor to Amazon.com (AMZN).
The company from Arkansas has pivoted hard to the e-commerce side of business pumping billions into developing its infrastructure.
Like many CEOs, management has understood for quite some time that the future is e-commerce and the delivery of products to people’s homes.
Walmart’s management saw this trend early and pounced on it and at one point during this year during the Trump rally, shares of WMT were up 60%.
That meant it was on track to have its best year since 1999 because the market came crashing down to reality. Back then, the retailer was building a bunch of superstores and making a bigger name for itself in Canada and Mexico.
Roughly 60% of Walmart’s business is groceries and consumers have relied on WMT to deliver competitive pricing during a high inflation environment. It’s improved its delivery and curbside pickup services, and that’s made it an attractive option.
WMT quickly has evolved into a digital package of services that is a worthy rival to Amazon.
The website, the app, and the annual membership have brought in new customers.
WMT has attracted the $100,000 per year household which they never did before and they will continue to deliver earnings to WMT as inflation and interest rates stay sky high.
Walmart has created an artificial intelligence (AI) agent for its merchants called Wally to help “get to the root cause of issues related to things like out of stocks or overstocks with more accuracy and speed.”
Walmart expanded its store-fulfilled delivery to reach 93% of U.S. households with same-day delivery, its chief financial officer said.
Sam’s Club ecommerce sales grew 24%, including triple-digit growth in club-fulfilled delivery.
Walmart Inc. announced 16% growth in its global online sales for its fiscal Q4 2025, which ended Jan. 31, 2025.
That’s about four times faster than the retailer’s overall Q4 revenue growth rate. Meanwhile, although Walmart didn’t specify its year-over-year ecommerce growth for the full 12-month period, Walmart said it grew revenue in that time frame.
Walmart’s fiscal 2025 marked the 10th consecutive year in which it grew its total annual revenue. Moreover, it has only had one year-over-year annual decrease — in 2016 — since at least its fiscal 2009.
Although, the recent short-term price action has been brutal to say the least, once all the bad news is priced into the stock, I do see the stock rallying to the upside.
Meanwhile, WMT becomes more and more like a tech company and pushes competitors like Amazon to raise its level of services to customers.
In the crush of higher inflation, WMT has delivered value to a higher income bracket in the United States and I believe that will continue as we me further into 2025 and 2026.
In the next few years, we will also see $200,000 per year salaried consumers grace the aisles and digital services of WMT to the benefits of the underlying stock.
Expect this type of showmanship to be the new normal as the U.S. government goes pedal to the medal hoping to extract better trade terms.
In the short term, expect wild swings in the prices of US tech stocks.
U.S. President Trump unilaterally raised the US tariff rate on China (FXI) to 125% and instituted a 90-day pause on steep 'reciprocal' tariffs.
The Nasdaq shot up by an intraday 10% - an unprecedented type of market reaction stemming from short-covering.
The entire tech index was heavily weighted for lower Nasdaq ($COMPQ) share prices and this one announcement torpedoed the short-term momentum to the downside.
2025 is presenting itself to be one of the hardest environments to trade in the last two decades plus as tech shares are the trajectory of them are reliant on the whims of an aggressive new federal government.
People are scared – scared more about the uncertainty this presents.
Uncertainty creates an environment to sell stock resulting in meaningful lower-tech shares.
Additionally, it is very obvious the federal government will target China and the way it does business to reign them in. They are the big fish.
Remember that China has a massive youth unemployment rate problem inching towards 30% and the Chinese Communist Party (CCP) knows they are playing with fire if Trump’s tariffs result in millions of new job layoffs.
Trump on Tuesday claimed that China, as well as other countries, are keen to negotiate. Those talks have reportedly begun with Japan and South Korea. But he has remained defiant as members of his own party and Wall Street billionaires start to push back.
On the negotiations front, both markets and trading partners still seem to be searching for what exactly Trump is seeking.
The president’s approach has prompted retaliation from China and caused other countries to draw up their own plans to hit American exports. As a result, economists have raised their expectations for a recession in the United States, and many now consider the odds to be a coin flip.
During the trade fight with China in Mr. Trump’s first term, U.S. agricultural exports plummeted after China imposed high retaliatory duties on soybean, corn, wheat, and other American imports, and the United States spent about $23 billion to support American farmers.
The Retail Industry Leaders Association, which represents major companies like Walmart, Target, and Best Buy, said this could drive up prices for the American consumer.
In the short term, this should first alleviate the pressure on the U.S. dollar and the price hikes for tech products.
I would stay away from companies that have exposure to China like Tesla and Micron.
Gradually, we will see countries come to the table and if this gets through, even in diluted form, it would be considered a victory for US tech stocks.
Sure, the Federal Government could again jump back on its horse and go insane with the tariffs, but I do believe this pause highlights the fact that they aren’t willing to nuke the economy and tech sector just yet.
I also believe there is a roadmap to claim victory in all of this.
It starts with East Asian countries like Japan and South Korea which will take a “bad deal” in exchange for stability.
We have seen this a few times with Japan and I don’t believe they will reject America’s approach when Japan’s economy, society, and direction are even worse than Europe and America combined.
Once we get a little bit more settled and predictable, it should be a great buy-the-dip opportunity in tech shares.
Mad Hedge Technology Letter
April 7, 2025
Fiat Lux
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