Walmart (NYSE:WMT) will release its earnings on August 15. The results are expected to be decent, if not spectacular. Most analysts expect store sales growth with double-digit operating margins, which should have a positive impact on Walmart stock.

I’m not the type to focus too much on quarterly reports, but prefer to look at the bigger picture, the long term. There are three things I’ll continue to pay attention to as the company continues to build out its gigantic business model.

For me, it comes down to Walmart’s growing advertising business, its use of AI technology to increase sales and profits, and Walmart’s growth plans.

Given the market volatility, Walmart stock is an excellent buy for conservative investors looking for a defensive investment.

Some people think Walmart stock is expensive, trading 26% above its actual value. I think you’re paying for quality, growth and safety in an excellent package.

Here’s why.

The contribution of the advertising business continues to grow

In fiscal year 2024 (year-ending January), Walmart’s advertising revenue increased 28% to $3.4 billion, or about 0.5% of total revenue of $648 billion.

In the first quarter of 2025, global advertising revenue increased 24%, with the U.S. ad business growing 26% year-over-year. Since specific dollar amounts are not given, we assume it increased to $4.22 billion on an annualized basis ($3.4 billion divided by 4 and multiplied by 1.24).

As far as advertising companies go, Walmart’s growth last quarter is on par with most major players, including Google, Meta-platforms (NASDAQ:META), Amazon (NASDAQ:Amazon) And Microsoft (NASDAQ:MSFT).

It is certainly about keeping up with the neighbors.

TVREV.com published an article on August 9th titled: Could Amazon’s advertising business become a target of the FTC? Google and META are at the top of the FTC’s target list. According to this commentary, Amazon is next.

Walmart may not be in the sights of regulators, but if the company continues to grow its advertising revenue by double digits, it could one day be. In the meantime, it’s very positive to keep an eye on developments.

AI technology increases sales and profit growth

One area that is sure to make a significant contribution to Walmart’s business is AI technology. Fortunately, Walmart generated free cash flow of $14.49 billion over the last twelve months, giving it plenty of cash to invest in the latest and greatest AI technology.

Investment bank Cascadia Capital released a study in June that predicted the retail technology sector will be worth $19.1 billion in 2022 and is expected to reach nearly $48 billion by 2030.

“Retailers are using AI-driven tools and virtual shopping technologies to transform the retail landscape, offering hyper-personalized, interactive and immersive shopping experiences while improving customer service and gaining insights into customer behavior,” TheStreet.com reported.

With Walmart’s weight and technology, the company can simultaneously improve the online user experience, increase e-commerce sales, and make its supply chain more efficient behind the scenes, leading to higher profits from its e-commerce business.

The company’s global e-commerce business grew 21% in the first quarter of 2025, largely thanks to in-store pickup and delivery. AI technology is omnipresent in this growth.

Walmart’s expansion plans are taking shape

In January, the company announced plans to open or remodel more than 150 large-format stores in the U.S. by the end of 2028. Some of these will be expanded locations that cover the full Supercenter grocery store concept, but most will be built from the ground up.

At the same time, the company is investing nine billion dollars over the next two years to modernize 1,400 stores in the USA. That’s about a third of the company’s total store space in the USA.

“These investments in construction will enable us to create more local jobs and make it easier for our employees to deliver what customers want, when they want it,” CNBC reported on comments made by John Furner, CEO of Walmart USA, in September 2023.

In Canada, where I live, they are testing new concepts at their Mississauga store, the largest Walmart store in the country.

The two-story store features a hot kitchen that offers customers hot meals to take away, as well as a Health Hub, a central area that combines a pharmacy, vision center and medical clinic – a first for the Canadian operation.

Whether in the U.S. or elsewhere, Walmart is committed to staying one step ahead of the competition. That’s a great thing if you own Walmart stock.

At the time of publication, Will Ashworth had no position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publishing guidelines.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.