Expect Shares To Surge In The Final Quarter Of 2025

Below is a conventional argument based on fundamentals for U.S. shares to climb in the final quarter of 2025 from Kevin Matras at Zachs, who is a commentator I respect.

We’re halfway through October, and it’s already living up to its reputation.

What’s that?

It’s known as the most volatile month of the year. (We experienced a bit of that the other week when stocks plunged on renewed trade tensions between the U.S. and China, after the latter announced rare earths trade restrictions, and the former proposed 100% tariffs in retaliation.)

But in spite of that notorious volatility, the month of October generally ends higher. (And we’re in the midst of seeing that too, as the major indexes are either already in the plus column for the month, or within striking distance of doing so.)

And with another earnings season having just begun (stocks typically go up during earnings season), I’m expecting October, once again, to end with big gains. And with earnings season already off to a great start (many of the big banks have reported record or near-record earnings), it could turn out even better than expected.

Adding to the bullish outlook is the fact that Q4 is historically the best quarter for stocks.

So, there’s that too!

The market has performed exceptionally well, so far.

YTD, the Dow is up 8.57%; the S&P is up 13.3%; the Nasdaq is up 17.5%; and the small-cap Russell 2000 is up 9.95%.

But the outlook is for much, much more.

And there’s a myriad of reasons why, beyond just the recurring seasonal tendency.

That includes the tamer inflation reports, the resiliency of the economy, the recent interest rate cut (and the two additional cuts expected in late-October and then again in December), and of course, the ongoing AI boom!

For those who missed the recent rally, or wished they would have taken better advantage of it, the good news is the next leg up could be even more spectacular.

And that’s exactly what I’m expecting.

Zachs, 18 October 2025. Kevin Matras

The above chart of the Russell 1000 supports Matras’s argument that share prospects look promising. The Russell 1000 is an index of the 1000 largest US companies considered suitable for institutional investment. On this long-term chart (each candlestick equals a year), we can see more clearly the important breakouts. There was one in 2013 and another in 2024. I don’t know how much significance to attach to the Coppock indicator but it can’t hurt that it is climbing steadily.

The Walton family is the wealthiest family in the world, with a combined net worth of over $432 billion as of early 2025. This immense wealth stems from their ownership of the retail giant Walmart, in which they own about 46%. The family’s wealth fluctuates with the company’s stock performance, which saw a significant surge in 2024.

Wal-Mart is an omnipresent chain of physical stores in America selling pretty much everything, so it might not seem a great choice as an investment in the AI era, but it is hard to argue with the share performance.  There has been an acceleration in 2024/ 25, which looks like a breakout.

The company is delivering steady growth.

Walmart Inc. (NYSE: WMT) announces second-quarter results with strong growth in revenue for each business segment. Globally, eCommerce grew 25% with digital mix up across all segments. Walmart U.S. comp sales up 4.6%with strong growth in grocery and health & wellness. Looking ahead, the Company issues guidance for the third quarter with net sales expected to increase 3.75% to 4.75% and operating income to increase 3.0% to 6.0%, both in constant currency (“cc”). The Company raises outlook for net sales growth to 3.75% to 4.75% and adjusted EPS1 to $2.52 to $2.62 for fiscal year 2026. Adjusted operating income guidance remains unchanged from at 3.5% to 5.5%.

Q2 2026 earnings release, 21 August 2025

And it is moving with the times.

The top-line momentum we have in our business comes from how we’re innovating and executing. Connecting with our customers and members through digital experiences is helping to drive our business, and the way we’re deploying AI will make these experiences even better. We’re people-led and tech-powered, and I love how our associates continue to drive change and results for our company.”

Doug McMillon, CEO, Wal-Mart, Q2 2026, 21 August 2025

The more forward-looking parts of the business, like e-commerce and China, are growing the fastest.

Our team delivered strong top-line results again this quarter with sales up 5.6% in constant currency. Growth in transactions and units is helping drive our performance. We grew eCommerce sales by 25% globally with all segments exceeding 20% growth, led by Walmart U.S., and Sam’s Club U.S. at 26%. Customers are liking our faster delivery speed. From a segment point of view, we grew International sales by 10.5% in constant currency, led by China, Walmex, and Flipkart. International continues to help lift our top line growth rate. Sam’s Club U.S. delivered a strong comp of 5.9% driven primarily by unit growth.
Walmart U.S. sales were stronger than we expected when we started the quarter. We grew comp sales by 4.6% with consistent strength throughout the quarter. Sales and general merchandise were positive in every segment and across categories in the US, led by apparel, media and gaming, and automotive. Again this quarter, we gained market share in the US and across markets internationally. Globally, we grew our marketplace by 17% and membership income by 15%. We grew global advertising by 46%, including VIZIO. Walmart Connect in the US was up 31% and excludes VIZIO. These strong growth rates in our newer businesses continue to change the shape of our income statement.

Doug McMillon, CEO, Wal-Mart, Q2 2026, 21 August 2025

Wal-Mart is not immune to AI; on the contrary.

For a few quarters now, I’ve been commenting on our use of artificial intelligence. Our enthusiasm for how AI can help us serve customers and members better, improve the experience for our associates, and increase productivity continues to grow. It’s been years since we made a structural change for a role reporting to the CEO, and we’ve done it in this case because we’re clear on a path to accelerate. Daniel Danker has joined us to lead AI acceleration, product management, design, tech prioritization, and AI-related change management. Daniel brings tremendous expertise and experience from places like Instacart and Uber. We also announced a new role reporting to Suresh Kumar, our Chief Technology Officer, that will focus on AI platforms. This role will help us increase innovation, speed and productivity, own the AI platforms and architect our intelligent system stack. We’re building agents into the core of how we operate, including four super-agents. There will be many agents that roll up to these super agents that our customers, associates, and other stakeholders’ experience. First is Sparky. Sparky is the customer-facing assistant you see smiling at the bottom of our app. Today’s Sparky takes us from traditional search to intelligent AI-powered assistants. Sparky will develop agentic capabilities over time. Customers are giving us positive feedback and we’re excited about the roadmap ahead. As we improve and scale Sparky, we’ll make it even smarter and more personalized. It will be the primary digital
vehicle for discovery, shopping, and for managing everything from reorders to returns. We see Sparky becoming an indispensable part of how people shop with us. The other super agents we’re building include one for associates that will bring everything into one place, from scheduling to sales data, one for our suppliers, sellers and advertisers that they will use to manage things like onboarding, orders, and campaigns. And lastly, a developer agent built to scale innovation across the business by speeding up how we test, build and launch new products. This is just the beginning of how we’ll deploy AI over time.
We see lots of opportunities, whether that’s with digital twins of our facilities, which can help predict or prevent issues before they happen, or the accuracy of dynamic delivery windows, which we’ll provide to 95% of US households by the end of this year. Our opportunities are numerous. We’re seizing the moment with AI.

Doug McMillon, CEO, Wal-Mart, Q2 2026, 21 August 2025

In an era of globalisation, the Internet and AI, it is easy to see Wal-Mart with its vast footprint changing into a very different business.

Sales in China grew 30% and Walmex (Wal-Mart in Mexico) grew over 6%. eCommerce growth was up more than 20% with penetration approaching 27% of segment sales. Across markets, this momentum continued to be led by storefulfilled, pickup and delivery, and 3P marketplace. Sam’s Club U.S. comp sales ex-fuel increased nearly 6% with strong growth driven entirely by units sold. We delivered positive comps across all key product categories, including another quarter of growth in general merchandise. The quality and value of Member’s Mark products continued to resonate with members as sales penetration increased 140 basis points. eCommerce grew 26% with club-fulfilled delivery representing nearly 50% of this increase, even while curbside pickup was up double-digits. Members are finding more ways to shop the club in an omni way, and we’re pleased to see unit growth accelerating along with spend per member, frequency and renewals all driving Sam’s Club U.S. results. Earlier this month we opened a new club in Tempe, Arizona. It’s the second club to feature a digital first experience, leveraging the convenience and popularity of our Scan & Go app with members.

Doug McMillon, CEO, Wal-Mart, Q2 2026, 21 August 2025

As well as paying dividends, Wal-Mart invests its free cash flow in share buybacks. Walmart Inc. consistently delivers strong profits and returns value to shareholders through stock buybacks. Reducing the number of shares outstanding increases the value of each remaining share, and since 1995, Walmart has nearly halved its share count.

I am adding Wal-Mart to my Top 40, which over time will become more diversified in the types of shares included as the benefits of AI and the technology revolution become more ubiquitous.

In case it is not obvious, McMillon is a star CEO. He is 59 and has only ever worked at Wal-Mart but has been groomed since his late 30s, if not before, to become CEO and took the top job in 2014.

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Wal-Mart Inc. WMT