Walmart just received a $2.9 billion “red envelope” and immediately said it would use all of it to cut prices.

The $2.9 billion is a tariff refund, and CFO Rainey revealed that less than $100 million has yet to be collected. But the key point isn’t how much money it is—it’s how Walmart plans to use it: pour it all into product prices, with the effects visible in the third quarter. Think about it: this isn’t about making a profit; it’s about buying market share.

Q2 revenue was $187.9 billion, e-commerce grew 23%, and same-store sales rose 2.6%. But net profit actually fell, from $7.03 billion last year to $6.37 billion. Profits are down, yet guidance was raised because Wall Street understands: Walmart is trading short-term profits for long-term market share. A $2.9 billion tax refund plus lower prices across all product categories—how are Costco, Target, and Kroger supposed to respond?

Even more striking is the shift in its customer base. Walmart used to be the supermarket for low- and middle-income shoppers, but higher-income customers are now flocking in. Walmart+ membership posted record additions, Sam’s Club membership grew 8.8%, and advertising revenue surged 38%. These figures show one thing: as inflation and gas prices squeeze everyone’s wallets, even the rich are setting aside their pride and shopping at Walmart. And once they come in and realize, “Hey, this is actually pretty good,” they may not go back.

The CFO’s words were interesting: “Real wages are rising in tandem, and consumers are demonstrating resilience. Even so, we still want to reduce prices further.” Translation: You can actually still afford it, but I’m going to cut prices anyway because I want to choke off my competitors’ lifelines.

But Walmart has its own troubles. Fuel costs will require more than $2 billion in additional spending this year, its health and wellness business has been dragged down by drug price cap policies, and inventory rose 6.7%, including plenty of premium goods—showing that Walmart is betting on a trend: trade-down consumption isn’t temporary; it’s structural. It is using premium inventory to attract the rich and low prices to retain the poor, winning on both ends.

The 38% surge in advertising revenue is another signal. Walmart is shifting from “selling goods” to “selling traffic,” benchmarking Amazon’s flywheel model. The more third-party sellers there are, the wider the product selection, the more valuable memberships become, and the higher advertising revenue climbs, which then attracts more sellers. Once this cycle gets running, Walmart won’t just be a retailer anymore—it will be a platform.

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