Walmart and Google's AI Shopping Bet: Assessing the TAM and Scalability of Agentic Commerce

The investment thesis here is straightforward: Walmart and Google are positioning themselves at the epicenter of a multi-trillion dollar market shift. Agentic commerce-where AI agents act on our behalf to shop, negotiate, and transact-represents a fundamental rethinking of retail. The total addressable market is staggering. According to McKinsey research, the US B2C retail market alone could see up to $1 trillion in orchestrated revenue from agentic commerce by 2030, with global projections reaching as high as $3 trillion to $5 trillion. This isn't a niche future; it's a seismic shift with the potential to rival the impact of prior web and mobile commerce revolutions.

The scalability of this opportunity is built on a simple premise: agents can "ride on the rails" of existing digital shopping paths. By 2030, AI agents could drive over $261 billion of US online spending, representing about 9% of the total projected $2.9 trillion e-commerce market. This growth is fueled by clear consumer demand. Research shows that nearly half of Americans would let an AI assistant browse for them, a figure that jumps to 59% among younger shoppers. They want help finding the lowest prices and choosing top-rated brands, indicating a strong appetite for AI-driven deal-hunting.

The key to capturing this massive TAM lies in the infrastructure. This is where the partnership's Universal Commerce Protocol (UCP) becomes critical. UCP is an open-source standard designed to work with existing retail infrastructure, providing a common language for seamless commerce journeys. It's not a walled garden; it's an open protocol backed by over 20 global partners, including Shopify, Target, Best Buy, and Visa. This ecosystem approach is essential for scalability. It allows businesses to maintain control and their existing checkout experiences while enabling AI platforms to integrate easily. For the growth investor, this means the protocol itself is a scalable, open infrastructure that can rapidly onboard participants across the entire commerce chain, from brands to payment providers. The setup is now in place for a fast-moving, frictionless market.

Strategic Positioning: Walmart's Dual-Pronged Approach

Walmart is executing a deliberate dual-pronged strategy to capture the AI shopping wave, leveraging partnerships with both Google and OpenAI. This isn't a choice between platforms; it's an effort to be the default retailer for any AI agent that a customer might use. The company announced its OpenAI/ChatGPT Instant Checkout deal in October, and just this month, it unveiled a new integration with Google's Gemini at the National Retail Federation's Big Show. By aligning with the two dominant AI chatbot ecosystems, Walmart ensures its products are surfaced and purchasable at the very start of an agentic shopping journey, whether that journey begins in a Google search or a ChatGPT conversation.

The strength of this approach lies in Walmart's core retail assets. Its huge assortment, everyday low prices and delivery speed provide a compelling value proposition for AI agents to recommend and fulfill purchases. For an agent, the goal is efficiency and satisfaction. Recommending Walmart means offering a one-stop shop for essentials, groceries, and household goods with predictable pricing and reliable delivery-exactly the kind of frictionless experience that drives adoption. This creates a powerful feedback loop: as more agents use Walmart, its data and scale become even more attractive for future agent development, reinforcing its position as the go-to fulfillment partner.

This strategy extends directly to its advertising business. Walmart Connect's AI-powered retail media platform is being enhanced to offer advertisers smarter, more accountable campaigns using first-party shopping signals. The company is already testing ad formats within its own Sparky agent, with 81% of surveyed Walmart customers saying they'd used Sparky to check product availability. As agentic commerce grows, this platform will become a critical channel for brands to reach customers in these new, AI-driven discovery moments. The setup is clear: Walmart is using its retail and media scale to become the essential infrastructure for the AI shopping economy, ensuring it captures value not just from the sale, but from the entire journey leading up to it.

Competitive Landscape: The Race for AI Shopping Dominance

The race for agentic commerce dominance is heating up, with starkly different strategic approaches emerging. Walmart is executing a broad, ecosystem play, while Amazon's aggressive, potentially disruptive tactics are drawing fire. The competitive landscape is now defined by open standards versus walled-garden control.

Walmart's momentum is undeniable. Its e-commerce sales surged 28% in the United States last quarter, adding roughly 440 basis points to comparable sales. This isn't just online growth; it's a core driver of overall performance, powered by a more automated network and faster fulfillment. This digital strength gives Walmart a crucial advantage as it partners with both Google and OpenAI, aiming to be the default retailer for any AI agent. Its scale and operational efficiency provide a compelling value proposition for AI platforms to recommend and fulfill purchases.

Amazon's approach, however, is a direct challenge to this collaborative model. The company is testing a "Shop Direct" program that uses AI to buy products from other retailers without their consent. This has sparked significant backlash, with online businesses objecting to their products being scraped and listed on Amazon's site, sometimes resulting in incorrect orders. This walled-garden strategy, which leverages Amazon's massive marketplace to act as a central agent, could backfire by alienating the very merchants it needs to populate its ecosystem. It represents a high-risk, high-reward play that prioritizes immediate control over long-term partnership.

In response, a broad coalition is forming around open standards. Google's Universal Commerce Protocol (UCP) is gaining traction, with partners like Target and Shopify, Etsy, and Wayfair backing it. This creates a powerful alternative to Amazon's model, offering a common language for AI agents to work across different retailers. The coalition's strength is its inclusivity; it allows businesses to maintain control over their storefronts and checkout experiences while enabling seamless AI integration. This ecosystem approach is critical for scalability and trust, directly challenging Amazon's centralized control.

The bottom line is a clear bifurcation. Walmart is building a defensible, scalable position by aligning with the open standard and leveraging its retail scale. Amazon is betting on its dominance to force a path, but its tactics risk creating friction and legal uncertainty. For agentic commerce to reach its full potential, the open, collaborative model championed by Walmart and its UCP partners appears more sustainable and likely to capture the massive, multi-trillion dollar market.

Financial Impact and Growth Levers

The massive TAM and strategic positioning now translate into concrete financial potential. For both partners, the growth levers are clear: capturing a larger share of online spending through frictionless AI-driven commerce and expanding monetization beyond traditional channels.

Google's recent financial performance sets a powerful benchmark. The company just reported its first-ever $100 billion quarter, a milestone driven by surging demand for AI across its entire portfolio. This isn't just growth; it's a demonstration of the massive scale and diversified revenue potential of an AI-powered platform. For Google, the Universal Commerce Protocol (UCP) is the next frontier. It expands its commerce footprint far beyond search ads and YouTube, creating new monetization avenues. By facilitating transactions through Gemini and Google Search, Google can capture value at the point of sale. The protocol also enhances its retail media business by providing richer, more accountable data on AI-driven discovery moments. As UCP adoption grows, it turns Google's AI infrastructure into a direct commerce engine, diversifying its revenue base and tapping into the trillion-dollar agentic market.

For Walmart, the primary growth lever is capturing a larger share of online spending via this frictionless AI-driven journey. The new Gemini integration is designed to move customers from inspiration to purchase seamlessly within the familiar Walmart environment. This directly targets the company's goal of increasing customer lifetime value. By making it easier for AI agents to recommend and fulfill purchases through Walmart, the retailer can convert more discovery moments into sales. This is especially potent given Walmart's huge assortment, everyday low prices and delivery speed. The partnership ensures Walmart is the default retailer when an AI agent is asked to shop, translating strategic positioning into direct revenue growth. The company's recent e-commerce sales surge of 28% shows this digital engine is already powerful; AI integration aims to accelerate it further.

The scalability of the UCP model is key to both partners' margin expansion. For Google, enabling commerce through a standardized, open protocol reduces the cost and complexity of onboarding retailers, allowing for rapid ecosystem growth. For Walmart, participating in UCP means it can leverage AI-driven discovery without ceding control of its checkout or customer data. This flexibility supports margin expansion by driving higher-volume, lower-friction sales through a channel that costs less to operate than traditional digital marketing. The bottom line is a virtuous cycle: a larger TAM attracts more AI agents, which drives more traffic and sales to partners, which in turn fuels further investment in the AI and logistics infrastructure needed to scale.

Catalysts, Risks, and What to Watch

The partnership's potential is now set against a clear timeline of validation. The immediate catalyst is the launch of the Google/Gemini integration, which will signal early demand and adoption. While the companies announced the deal at the NRF Big Show, they have not yet disclosed a specific launch date or financial terms. The feature will start in the U.S. and expand internationally. For investors, the key near-term milestone is the actual rollout. Early user adoption metrics-such as the volume of transactions initiated through Gemini and the conversion rate from discovery to purchase-will be critical. Success here would validate the frictionless journey Walmart and Google are promising and provide a real-world test of the Universal Commerce Protocol's (UCP) functionality.

A major risk to scalability is fragmentation. The agentic commerce space is still nascent, and competing standards could emerge. While the UCP has strong backing from partners like Shopify, Target, and Etsy, a rival protocol could dilute its value and slow merchant adoption. The risk is that retailers and brands face a choice between multiple, incompatible systems, increasing integration costs and delaying the network effects that make an open standard powerful. The coalition's strength lies in its inclusivity, but the threat of fragmentation is real and could impede the rapid, seamless ecosystem growth needed to capture the trillion-dollar TAM.

Beyond the core integration, a high-margin revenue stream to monitor is the evolution of Walmart Connect's AI advertising tools. This represents a direct monetization of the agentic commerce ecosystem. The platform is already testing ad formats within Walmart's Sparky agent, with 81% of surveyed Walmart customers saying they'd used Sparky to check product availability. As AI agents become the primary discovery tool, Walmart Connect will be positioned to serve brands with smarter, more accountable campaigns. The company is building AI-powered retail media that combines first-party shopping signals with omnichannel scale. The key metric here will be the adoption rate of these new AI-first ad formats and their contribution to Walmart's advertising revenue, which is a high-margin business. Success would demonstrate that the partnership not only drives sales but also creates a powerful new channel for brand engagement and revenue.