Walmart said Thursday that it made a record $681 billion in sales, more than any other company on earth and good for a 5.1% increase, in its latest fiscal year. The big box retailer’s income from operations rose even faster, climbing 8.6% to $29.3 billion.

Which, of course, means — [drumroll] — Walmart shares had their most calamitous day in three years, tumbling 6.5%. That’s because when executives pulled out their crystal ball — a.k.a., annual guidance — investors glimpsed a future they were none too keen on.

No Fun in Fundamentals

Walmart’s stock has behaved more like that of a white hot Silicon Valley tech darling over the past 12 months, rising 66%. That’s better than the broader market and rival retail behemoth Amazon — not bad for a 62-year-old staple of Arkansas — and comes thanks to strengths almost tailor-made for the current consumer retail market.

Walmart has long been able to offer lower prices than smaller competitors because of the negotiating power its massive market share gives it over suppliers. Those low prices, executives say, have drawn in a new cohort of wealthier customers — defined as people earning over $100,000 — who, amid steady US economic and wage gains muted by stubborn inflation, are newly converted bargain hunters. During the fourth quarter, same-store sales at the company’s namesake outlets rose 4.6%, beating Wall Street expectations and the broader 3.8% increase in retail spending during the US holiday season. To boot, Walmart’s global e-commerce sales rose 16% during the holiday shopping period. But hindsight, as they say, is 20/20, and a cloudier future is what set markets on edge in the face of such a strong performance:

• Walmart executives said its current fiscal-year revenue growth target is 3% to 4%, well below last year’s 5.1%. This projection also pegs Walmart’s adjusted earnings per share for the year at $2.50 to $2.60, substantially lower than Wall Street’s $2.76 forecast.
• Investors view Walmart — which leads the US grocery market with a 23% share — as an essential indicator of consumer sentiment, which is why its forecasts are so closely watched. On the upside, Chief Financial Officer John David Rainey indicated on the company’s investor call that executives are being cautious in their estimates: “We have to acknowledge that we are in an uncertain time and we don’t want to get out over our skis here.” 

X-Factor: Rainey said Walmart did not factor looming US tariffs on foreign goods into its forecast, because it’s unclear if or when they’ll kick in. He did note that even though two thirds of the things Walmart sells are manufactured, assembled, or grown in the US and despite its considerable sway with suppliers, it wouldn’t be immune to price hikes. But Walmart’s inventory levels increased 3% last quarter, suggesting it may be calling in orders to get ahead of future levies. 

Investors went gaga for Alibaba yesterday. The Chinese company’s US-listed shares jumped 10% after its revenue rebounded in the holiday quarter and it announced “aggressive” AI investment plans. 

Think of Alibaba as China’s Amazon: It’s an ecommerce giant that makes the bulk of its revenue from online stores that sell everything from toilet paper to teddy bears. Singles Day, the unofficial Chinese holiday for people not in a relationship that’s become the world’s highest-spending shopping event, helped boost Alibaba’s retail sales in the most recent quarter.

But while e-commerce is currently Alibaba’s biggest piggy bank, hype is building around its burgeoning cloud biz, which saw revenue pop 13% in the most recent quarter. All eyes are on the cloud sector’s recent AI advancements and Alibaba’s plan to invest more in the unit over the next three years than it did throughout the past decade.

Call it ChinaGPT

Alibaba CEO Eddie Wu said yesterday that AI could one day significantly influence, or replace, half of global GDP. And the Hangzhou-headquartered company doesn’t plan on letting US rivals own the AI economy:

• Alibaba dropped its own AI model last month, Qwen 2.5-Max, which it said outperforms rival models made by OpenAI, Meta, and Chinese startup DeepSeek.
• Alibaba and Apple said last week they’ll team up to power Apple’s new AI features on its iPhones (a.k.a., Apple Intelligence) with Alibaba’s AI tech.

Competition from China is heating up. DeepSeek dropped an AI assistant so powerful last month that it rattled shares of US-based AI companies. Within days, TikTok parent ByteDance released an update to its AI model, claiming its abilities surpassed OpenAI’s.

Limitations to Innovations: Not only have Chinese tech companies perfected the art of the export curb workaround, but their limited access to advanced tech has forced them to create final products that claim to be more energy- and cost- efficient than their overseas counterparts. Stateside AI companies that have burned through billions with no profit in sight could soon feel the need to justify or cut their costs. Thursday’s earnings call also comes just days after enigmatic Alibaba co-founder Jack Ma attended a rare closed-door meeting between Chinese tech luminaries and President Xi Jinping, who urged them to think big. Ma had kept a low profile for two years following Beijing’s crackdown on uppity tech billionaires that had sent a very different kind of message. We here in the US could not imagine a world in which a singular powerful tech billionaire wields enormous power.

Diamonds are the hardest known substance, but the diamond-mining market is looking more fragile than ever. 

On Thursday, mining giant Anglo American announced a $3.1 billion loss in its full-year results for 2024, and marked down the value of its diamond unit De Beers, which it has been trying to offload, by $2.9 billion. It notched a $1.6 billion writedown of the unit last year, so this year’s markdown is 81% bigger.

Cut-Price Diamonds

De Beers, one of the largest and most iconic companies in the diamond mining sector, has been battered by market forces that have left the industry as a whole pretty frazzled. The ascendance of cheaper lab-grown gems has eaten into mined gems’ market share, demand died off dramatically post-lockdown (when consumers were more likely to throw caution to the wind for a shiny stone), and Russian sanctions threw off the supply chain.

For Anglo American, which spent last year fending off a takeover by rival BHP and has promised a major restructuring, De Beers makes sense to jettison. Exactly how, though, is a multi-faceted question:

• Anglo American has considered both selling De Beers outright and spinning it out via an IPO. Earlier this month, the IPO route was looking more likely after the government of Botswana expressed an interest in acquiring a bigger stake in the company (it currently owns 15% compared with Anglo American’s 85%).
• De Beers CEO Duncan Wanblad said Thursday that Botswana hasn’t yet decided how big an extra chunk it might take, and that agreeing on licenses with the country’s government had slowed its ability to field “unsolicited inbounds” for the company, per the Financial Times.

Diamonds Cache Value: Wanblad also said that a portion of the company’s current valuation of De Beers rests on a $2 billion stockpile of gems. The retail price of natural diamonds has decreased 26% since peaking in 2022, per a January report from The Guardian, so who knows just how precious that stockpile will remain.