Walmart (WMT -4.77%) is one of the largest retailers in the world. It has achieved massive success with its large format box stores, Sam's Club stores, and its smaller grocery store locations. But that doesn't mean that everything it touches turns to gold. The company's recent $2.3 billion investment in Vizio is one endeavor that investors will want to monitor closely.

Walmart has made big acquisitions before

One of the most notable acquisitions that retailer Walmart has made in recent years was Jet.com. This roughly $3.3 billion deal goes back to 2016 when Walmart was looking to compete online with Amazon.com (AMZN -3.92%). While the Jet.com deal was less than a decade ago, it seems like a totally different time.

Image source: Getty Images.

Back then, Walmart's online presence wasn't particularly impressive, and Amazon was still in the early days of its growth. According to Walmart:

The acquisition will build on and complement the significant foundation already in place to serve customers across the Walmart app, site, and stores and position the company for even faster e-commerce growth in the future by expanding customer reach and adding new capabilities.

That's a bit of cheerleading, which is to be expected of a corporate event news release. The key sentence from that news release, however, was this: "Walmart and Jet will maintain distinct brands, with Walmart.com focusing on delivering the company's Everyday Low Price strategy, while Jet will continue to provide a unique and differentiated customer experience with curated assortment."

In 2020, just four years after buying Jet.com, Walmart closed the Jet.com website. Management extolled the benefits of the deal, which supposedly helped Walmart up its online retail game. But, in the end, Jet.com really wasn't an investment win for Walmart.

Walmart buys Vizio for advertising technology

This brings the story to Vizio, which makes electronics and, more recently, has created a software platform for advertising. Advertising is a new growth initiative for Walmart. So, in some ways, the $2.3 billion Vizio deal makes sense. Given Walmart's market cap of over $700 billion today, it's not exactly a huge transaction.

The problem is that Walmart hasn't been specific about what Vizio brings to the retailer other than some new software. During the company's fourth quarter 2024 earnings call, Walmart CFO John David Rainey noted:

We're also excited about the addition of VIZIO and its SmartCast operating system to our portfolio of advertising capabilities. VIZIO will help us serve customers in new ways to enhance their shopping journeys while also creating new opportunities for advertisers to connect with customers and boost product discovery, empowering brands to realize greater impact from their advertising spend with Walmart.

When pressed on the issue by an analyst, the company's U.S. head explained:

The operating system in VIZIO is an impressive operating system. It works with very little friction. It's easy to set up and install. I have several of these personally, and I've acquired more since we started talking about this acquisition.

I'm just really pleased with the way it works for the Walmart Connect business to have more ways to distribute advertising for sellers and suppliers; that's really exciting for them. We hope to be able to do that in a very efficient way. So, we're starting the process of integration. And over this next year, we'll be working on bigger plans for the brand as the teams get more time to work together.

Neither of those statements offers a lot of detail about how Walmart actually plans to make use of Vizio's software. It seems more like Vizio has interesting software that could help Walmart, so they bought it, and now they'll try to figure out if that's true or not. This is clearly a glass-half-empty view of the situation, but given the Jet.com outcome, it is one that investors should probably take seriously. After all, Walmart is a retailer, not an advertising company. Past efforts to broaden into different categories, like finance (such as check cashing), haven't exactly turned into huge wins, either.

Walmart can afford to make mistakes

Walmart is a giant company, and a $2.3 billion mistake won't be that big of a deal if that's what the Vizio purchase ends up being. That said, it isn't a good thing if the company wastes investor money or if it goes down distracting rabbit holes that don't pan out. This giant retailer won't suddenly become a bad company because of Vizio, but it could be an indication that, perhaps, Walmart should be giving more money back to shareholders because it is having trouble finding growth investments on which it is worth spending shareholder money.