Martin Gamble on US markets: Walmart shines, Palo Alto dives

Wall Street endured a mixed week as some of the recent AI-related selling in software and data companies eased but US-Iran tensions and minutes from the Federal Reserve’s latest meeting caused some jitters.

The Fed minutes even encompassed some talk of interest rate hikes which went down about as well with investors as they may have done in the White House given the Trump administration’s vocal calls for rates to be cut.

At a company level, vaccine maker Moderna was higher after the regulator reversed a previous decision to reject the company’s application on a new flu shot. Embattled advertising giant Omnicom also surged as it announced a $5 billion share buyback.

IT consultant EPAM Systems was among the losers despite a strong fourth-quarter performance as it flagged margin pressures and issues with a key client in Mexico. Automotive parts distributor Genuine Parts lso fell as earnings missed expectations.

Walmart

Consumer spending bellwether Walmart topped analysts’ expectations for the key fourth quarter of its financial year but its earnings outlook for 2027 fell short of consensus estimates.

That didn’t seem to dent positive sentiment with the shares gaining more than 3% after initially falling in the premarket.

The conservative forecast comes after a strong run in the shares which are up around 22% over the last year, pushing the company’s market value through the trillion-dollar mark for the first time.  

For the 2027 financial year Walmart guided for revenues to increase in a range of 3.5% to 4.5% and for adjusted earnings per share of $2.8 taking the middle of the range, compared with analysts’ estimates of $2.97.

Analysts’ take on the cautious outlook was that it reflected a ‘low bar’ for new CEO John Furner to beat while also giving the company some wiggle room against a tricky economic backdrop and cooling consumer spending.

Despite the shares trading on a relatively high 2026 PE (price to earnings) ratio of 50 times, Walmart announced a $30 billion share buyback. The company also raised the annual dividend by 19% to $0.99, marking the 53rd consecutive year of increases.

Deere & Co

Agricultural equipment maker Deere & Co delivered a fourth quarter earnings beat and raised annual guidance on 19 February amid signs of ongoing recovery in the farming sector.

Deere chairman and CEO John May commented: “While the global large agriculture industry continues to experience challenges, we're encouraged by the ongoing recovery in demand within both the construction and small agriculture segments.”

The company now expects net income for 2026 in a range of $4.5 billion to $5 billion, around 9% higher than previously expected and above consensus analysts’ estimates of $4.45 billion.

Deere has faced tariff headwinds due to its reliance on imported raw materials to manufacture tractors and the company said it expects a 2026 pre-tax impact of $1.2 billion.

The shares rallied more than 9% on the day of the results. adding to strong momentum seen over the last few months which recently pushed the shares to new all-time highs of $647 a share.

Palo Alto Networks

Cybersecurity firm Palo Alto Networks announced better than expected second quarter earnings, but a weak outlook saw the shares fall as much as 7% on 17 February.

The company cut its 2026 adjusted earnings per share forecast to a range of $3.65 to $3.70 from $3.80 to $3.90 while raising its revenue projection to between $11.28 billion and $11.31 billion.

The downgrade was due to rising costs related to recent acquisitions including the $2.3 billion purchase of identity security firm CyberArk and the $2.6 billion spent on real-time data specialist Chronosphere.

Palo Alto had previously acknowledged the challenge of integrating larger acquisitions, which require more restructuring.

Taking a positive spin on the extra costs, Morningstar analyst Malik Ahmed commented: “We see the firm being able to leverage these acquisitions by cross selling its existing customer base.”

The company has been repositioning itself as a one-stop shop to align with the trend towards integrated platforms.  

CEO and chairman Nikesh Arora explained: “We saw continued strength in platformizations, a trend that is accelerating due to AI - customers are keen to both modernize and normalize their cybersecurity stack, aligning them to our approach.”