TD Cowen analysts name Walmart (WMT) as "Best Idea for 2024," citing investments into e-commerce, digital advertising, and AI as securing the retailer's spot as "a new retail nexus."

Yahoo Finance Live discusses Walmart's outlook — which currently sits with an "Outperform" rating and a $188 price target from TD Cowen — for the new year.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

This post was written by Luke Carberry Mogan.

Video Transcript

[AUDIO LOGO] BRAD SMITH: TD Cowan names Walmart as Best Idea for 2024.

The firm rating the retail giant at Outperform saying, its e-commerce marketplace and digital advertising working alongside artificial intelligence will, quote, "drive a new retail nexus."

TD Cowen saying its leading private-label share gains better inventory management and higher income traffic.

Gains all contributing to its optimistic outlook.

The firm saying it views Walmart as a best-in-class retail tech leader here.

Summary of their thesis-- global retail ecosystem, powerful, about 4,700 US store reach, leading technology nexus of marketplace, digital advertising, artificial intelligence.

And they like the defensive characteristics of this.

And this points back to some of the other calls that we've heard on the Street of defense wins championships, as you were mentioning earlier on.

SEANA SMITH: Defense wins championships, like Evercore put out there for their outlook into next year.

And I think it applies to here.

When you take a look at Walmart, some of the trends that they are seeing.

The fact that so many consumers have been trading down for their goods, for their shopping over the last several months.

Walmart has stand to benefit.

We have seen that outperformance, especially when you compare Walmart's numbers to Target.

We know Target much more heavily relies on some of those consumer discretionary purchases, which has pressured Target in recent quarters.

Walmart has, pretty much by a wide margin, really been beating the Street's expectations much better than what we had initially anticipated in terms of the resilient consumer, and the consumer who is out there still spending.

They're choosing to do it in maybe a more budget-friendly type manner.

So they're making more trips here to Walmart.

But when it comes to some of those other reasons why Oliver Chen here at TD Cowen likes Walmart here, he talks a lot about their AI investments.

Their efforts surrounding generative AI, and what exactly that could potentially do in terms of securing and generating more data here for the company, and also just tailoring their content and their offerings in the future, just the edge that that could really give Walmart here over the coming years.