Walmart $WMT ( ▼ 1.73% ) heads into its upcoming earnings report with enormous pressure to deliver, as the retail giant has become one of the market’s most crowded “safe haven” trades. Last year, disappointing guidance from the company helped trigger a broader selloff from record highs, making this release especially closely watched.
In 2026, investors seeking stability have poured money into defensive names, pushing Walmart’s valuation sharply higher and propelling it into the trillion-dollar market cap club.
Safety trade pushes valuation to extremes
Walmart has dramatically outperformed the broader market. Relative to the SPDR S&P 500 ETF $SPY, the stock is trading at levels not seen since the aftermath of the global financial crisis. Options markets also reflect the optimism, with bullish calls priced unusually high compared with historical norms.
In a sign of just how stretched sentiment has become, the stock is currently trading above Wall Street’s average 12-month price target, something that has not happened at any point in the past five years.
High expectations create downside risk
When expectations are elevated, even solid results can disappoint investors. Analysts warn that the hurdle for positive market reaction is extremely high regardless of the actual earnings figures.
Some strategists suggest shareholders consider locking in gains or hedging positions after the stock’s strong run. Proposed tactics include selling covered calls or using options collars to protect against a potential pullback while maintaining some upside exposure.
In short, Walmart’s fundamentals may remain strong, but the real question is whether they can justify a valuation that already assumes near-perfection.