Search for almost anything on Walmart.com, and some of the first results you see carry a small “Sponsored” label. Turn on a Vizio TV, and the free channels on its home screen carry ads, too.

Both of those screens now feed the same business, and it is growing far faster than the stores that made Walmart (WMT) famous.

Walmart’s global advertising business grew 46 percent to nearly $6.4 billion in its fiscal year ended in January, the company said in its fourth-quarter earnings release. That includes Vizio, the TV maker it bought in December 2024.

The pace hasn’t slowed. Walmart’s advertising business “continues to grow at a 40% clip on a much higher base,” CFO John David Rainey said on the company’s Aug. 20 earnings call.

What has shifted is who is paying for those ads. Retail ads have traditionally been bought by brands already sitting on the store’s shelves, from cereal makers to shampoo companies.

According to a Bank of America research note dated Oct. 19 and reviewed by TheStreet, Walmart is now winning marketing dollars from “non-endemic” advertisers, meaning brands that don’t sell their products in Walmart stores at all.

Walmart Connect is pulling in brands it doesn’t sell

The note followed a meeting Bank of America hosted in New York with Ryan Mayward, senior vice president and general manager of Walmart Connect U.S. Analyst Christopher Nardone wrote it with the bank’s media and entertainment team.

Its title spells out the shift: “Walmart Connect meeting highlights non-endemic advertising opportunities.”

More Walmart:

• How Walmart is quietly winning the battle for shoppers
• Walmart found a new way to profit from every shopper
• Walmart’s war with Amazon just moved into your living room

Walmart Connect “is increasingly capturing marketing dollars that previously flowed to other retailers given growing capabilities and Walmart’s differentiated dataset,” wrote Nardone. He put that dataset at about 150 million customers who shop Walmart in stores or online each week.

Walmart’s own numbers back up the momentum. Walmart Connect in the U.S. grew 43 percent in the quarter ended July 31, excluding Vizio, while global advertising grew 38 percent, according to PPC Land’s review of the results.

The rest of the business grew far more slowly. Walmart’s total revenue rose about 5.9 percent to $187.9 billion, and U.S. comparable sales rose 2.6 percent, excluding fuel.

The television piece is central to the non-endemic push. Walmart estimates it sells more than half of the TV units in the U.S., and Vizio’s operating system was the leading U.S. smart TV system as of February, according to the company, the note said.

That gives Walmart a screen in millions of living rooms, plus ad inventory on Vizio’s free streaming service WatchFree+, to sell to advertisers, such as insurers or streaming services, that never needed a Walmart shelf.

Why marketplace sellers pay up for ads

The other growth engine is the third-party marketplace, where Walmart is “adding tens of thousands” of sellers, Bank of America said. U.S. marketplace sales grew 52 percent in the latest quarter, PPC Land reported.

Those sellers are the most valuable ad customers Walmart has. Here is how the note sizes the gap:

• Marketplace sellers typically spend about 10 percent to 12 percent of their gross merchandise value on advertising, Bank of America estimates.
• Traditional Walmart suppliers spend roughly four percent to six percent, the bank estimates.
• Amazon’s ad revenue grew 26 percent to $19.8 billion in its second quarter, outpacing 15 percent growth in its online stores, according to EcomCrew’s breakdown of Amazon’s results.
• Vibe.co, which Walmart closed on Aug. 4, gives small businesses a self-service way to buy streaming TV ads, Walmart confirmed.

By my analysis, that ad spending is a cost of doing business, and costs like that tend to show up somewhere. If a small seller pays 12 cents of every sales dollar to be seen, that money comes out of its margin or, eventually, out of its prices.

For shoppers, the practical takeaway is simple. The first product you see on Walmart.com is often the one that paid to be there, so scroll past the sponsored slots and compare unit prices before you add something to your cart.

Amazon offers the closest preview. Its ad revenue grew faster than its online store sales in the second quarter, and the same dynamic is now building inside Walmart’s marketplace.

Related: Walmart’s CEO tells BofA where his retail chain is headed next

Given that backdrop, it’s easy to see why Nardone thinks small businesses “could represent a multibillion-dollar advertising opportunity for Walmart longer term.”

Vibe “makes streaming TV advertising simple and accessible for businesses of all sizes,” said Mayward when the deal closed.

What Bank of America expects next from the ad arm

Sam’s Club is next in line. Walmart is moving the Sam’s Club U.S. ad platform onto Walmart U.S.’s technology, and advertising there is “currently representing only a small business today,” the note said.

The bank sees room for brands to stretch one ad budget across Walmart U.S., Sam’s Club, and Walmart’s international markets.

Artificial intelligence is the wild card. Walmart has its own shopping assistant, Sparky, and works with outside agents, including Meta’s Muse, which the bank said makes Walmart “a relative winner” if agentic commerce spreads. “The number of customers using Sparky is up 70% from last year,” CEO John Furner said on the August call.

Still, management told the bank “it remains early to assess how Muse may reshape the advertising landscape,” the note said. Much will likely depend, however, on whether AI agents still show sponsored results when they shop for you, a question nobody has fully answered yet.

If an agent picks the cheapest or best-rated item instead of the sponsored one, part of the ad model built for human scrolling loses its punch. If it doesn’t, Walmart’s ad business could get even bigger.

I’d watch the advertising line in Walmart’s next quarterly report more closely than the comparable sales figure. That is where the margin story lives now, and a slowdown there would matter more to the stock than a soft month in groceries.

Bank of America’s $126 price objective implies about 6.1 percent upside from Walmart’s $118.81 price in the note. It rests on 40 times the bank’s fiscal 2028 earnings estimate, above Walmart’s two-year average of about 36 times.

Nardone, for his part, kept his Buy rating. The premium multiple reflects “WMT’s leading edge on deploying technology to drive consistent share gains and operating income growth nearly double the pace of sales growth,” he wrote.

Related: Walmart takes aim at Costco with a new shopping perk