Walmart Connect grew 43% while Walmart U.S. grew 3.5%. The ads are the margin now.

Growth like that does not come from more shoppers. Walmart's traffic is attached to a merchandise business compounding at 3.5% ^[2], so the advertising line has to come from more slots per visit at higher prices, plus surfaces that carried no ads until recently: marketplace pages, video, connected TV ^[3]. That works until the surfaces fill. Walmart's own sequence shows the arithmetic starting to bend. Global advertising rose 46% for fiscal 2026 ^[4], then 37% and 38% in the two quarters after ^[5], eight points off the annual pace ^[3]. Connect went from 44% to 43% ^[6][1]. The dollars are still substantial, about $2 billion added at the global line year over year ^[7][2], but the rate is easing as the base gets heavier.

Target's number is harder to read than Walmart's. The company says some Roundel arrangements are recorded as reductions to cost of sales or SG&A depending on the arrangement ^[9], which means the reported figure is a subset of the business, and the subset can move. Reported advertising revenue grew 29% ^[11] while gross billings grew nearly 20% ^[10]. Part of that nine-point spread ^[7] is a booking question rather than a demand question, and nobody outside the company can separate merchandising margin from advertising dollars netted against cost of sales.

Walmart is blunter about where the money lands. Chief Financial Officer John David Rainey said advertising and membership revenue contributed to double-digit incremental margins in Walmart U.S. eCommerce in the first half ^[12]. The eCommerce profitability story, in other words, is partly an advertising story. Amazon shows the endpoint at scale: $19.8 billion of advertising services in a single quarter against $70.4 billion of online store sales ^[13][14], roughly 28 cents of advertising for every dollar of first-party retail ^[5]. The $4.1 billion Amazon added year over year in that quarter ^[6] is more than four times Target's entire 2025 advertising revenue of $915 million ^[15][9].

Which turns this into a capital allocation argument. Target opened 17 stores in the quarter with more than 100 full-store remodels underway ^[16], and more than 95% of its sales are fulfilled through stores ^[17]; Chief Executive Michael Fiddelke listed personalization across stores and digital channels and a stronger retail media business in the same account of the company's technology spending ^[18]. The stores are the audience being sold. If merchandise grows 3.5% at Walmart and 5% at Target ^[2][19] while advertising is expected to grow 26% at Amazon and 43% at Connect ^[20][1], the incremental dollars come out of brand marketing budgets, not out of shopper growth. That makes retail media a share-of-wallet fight with media companies, run on a P&L that still reports as retail.