Amazon surpasses Walmart revenue for the first time in corporate history, marking a seismic shift in the global retail landscape. The e-commerce giant reported full-year 2025 revenues exceeding $700 billion, officially dethroning Walmart as the world’s largest company by sales. This milestone, decades in the making, reflects Amazon’s relentless expansion into cloud computing, advertising, logistics, and artificial intelligence – far beyond its roots as an online bookstore.
For investors, analysts, and anyone watching the retail sector, this isn’t just a headline. It’s a fundamental restructuring of how the world shops, ships, and spends. Let’s break down what happened, why it matters, and what comes next for both retail titans.
How Amazon Surpasses Walmart Revenue: The Numbers Behind the Shift
Amazon’s fiscal year 2025 results revealed total net revenue of approximately $700 billion, compared to Walmart’s reported $681 billion for its fiscal year ending January 2026. While Walmart posted record revenues of its own – driven by strong grocery sales and international expansion – Amazon’s diversified revenue streams pushed it past the finish line first.
The key difference? Amazon doesn’t just sell products. Its revenue mix includes:
- Amazon Web Services (AWS): Over $105 billion in annual revenue, making it the world’s largest cloud provider
- Advertising: A rapidly growing $56 billion business that rivals Meta and Google
- Third-party marketplace fees: Commissions from millions of sellers worldwide
- Prime subscriptions: Over 200 million members paying annual fees
- Physical stores: Including Whole Foods and Amazon Fresh locations
Walmart, by contrast, generates the vast majority of its revenue from physical retail and grocery sales. While Walmart+ and its e-commerce operations have grown significantly, they represent a smaller portion of total revenue compared to Amazon’s digital ecosystem.
The AI Factor: Why Technology Spending Accelerated Amazon’s Growth
One of the most significant catalysts behind Amazon’s revenue surge is its aggressive investment in artificial intelligence. CEO Andy Jassy has repeatedly emphasized that AI represents a “once-in-a-generation” opportunity, and the company’s spending reflects that conviction.
In 2025 alone, Amazon invested over $85 billion in capital expenditures, with a substantial portion directed toward AI infrastructure for AWS. Enterprise clients are migrating workloads to cloud platforms at an accelerating pace, and Amazon’s custom AI chips – Trainium and Inferentia – are helping the company capture more of this demand while reducing dependency on Nvidia.
AWS alone grew roughly 19% year-over-year in Q4 2025, significantly outpacing Amazon’s overall retail growth rate. This cloud dominance provides Amazon with high-margin revenue that Walmart simply cannot replicate through its brick-and-mortar operations.
Walmart’s Response: Record Revenue Isn’t Enough
It would be unfair to paint Walmart as a loser in this story. The Bentonville, Arkansas-based retailer posted its own record annual revenues and continues to dominate grocery retail in the United States. Walmart’s international operations, particularly in Mexico and India (through Flipkart), have shown impressive growth.
CEO Doug McMillon has also pushed Walmart deeper into e-commerce, with online sales growing over 20% in recent quarters. Walmart’s marketplace now hosts thousands of third-party sellers, and its advertising business – while smaller than Amazon’s – is growing at a similar pace.
However, Walmart faces structural challenges that limit its ability to compete with Amazon on revenue growth:
- Lower margins: Grocery retail operates on razor-thin margins compared to cloud computing and digital advertising
- Physical infrastructure costs: Maintaining over 10,500 stores worldwide requires enormous ongoing investment
- Limited tech diversification: Walmart lacks a cloud computing or major subscription platform comparable to AWS or Prime
For a deeper look at how major indices are reacting to retail sector shifts, see our analysis of the Dow Jones approaching 50,000 and why small caps are outperforming big tech in February 2026.
What This Means for Retail Sector Stocks
The Amazon-Walmart revenue crossover has broader implications for the entire retail sector. Investors are increasingly differentiating between traditional retailers and tech-enabled commerce platforms, and valuations reflect this divergence.
Amazon (AMZN) trades at a significantly higher price-to-earnings multiple than Walmart (WMT), reflecting the market’s expectation that Amazon’s growth trajectory will continue to outpace traditional retail. Meanwhile, other e-commerce players like Shopify, MercadoLibre, and Sea Limited are benefiting from the broader shift toward digital commerce.
Key takeaways for stock investors:
- Amazon’s premium valuation is justified by its diversified revenue streams and higher growth rate
- Walmart remains a defensive play with strong dividend history and recession-resistant grocery sales
- Mid-cap retailers face the most pressure – companies without a clear digital strategy risk losing market share to both giants
- Retail ETFs like XRT and RTH may see increased volatility as the sector reprices around this new reality
The Bigger Picture: E-Commerce vs. Physical Retail
Amazon’s ascent to the revenue throne symbolizes a broader economic transformation. According to the latest data from Reuters, global e-commerce penetration continues to rise, with online sales now accounting for over 22% of total retail worldwide – up from just 14% in 2019.
This shift is not limited to the United States. In markets like China, South Korea, and the United Kingdom, e-commerce already represents 30-40% of total retail sales. Amazon’s global logistics network, spanning fulfillment centers on six continents, positions it to capture growth in emerging markets where internet penetration is still rising.
Meanwhile, physical retailers are adapting. Walmart’s curbside pickup, same-day delivery, and in-store fulfillment capabilities have blurred the line between online and offline shopping. Target, Costco, and other major chains are investing heavily in omnichannel strategies to compete.
As Yahoo Finance reports, the convergence of AI, logistics automation, and personalized shopping experiences is creating a new retail paradigm where the distinction between “online” and “offline” may soon become irrelevant.
5 Reasons Amazon Could Extend Its Revenue Lead
Looking ahead, several factors suggest Amazon’s revenue advantage over Walmart could widen rather than narrow:
- AWS growth acceleration: Enterprise AI adoption is still in early innings, and AWS stands to benefit from multi-year cloud migration contracts
- Advertising momentum: Amazon’s advertising business is growing faster than its retail operations and carries significantly higher margins
- Healthcare expansion: Amazon Pharmacy, One Medical, and its PBM ambitions could open entirely new revenue verticals
- Alexa and smart home: Amazon’s ecosystem of devices creates recurring revenue and deepens customer loyalty
- International growth: Amazon is investing aggressively in India, Brazil, and other high-growth markets
For context on how tech-driven growth is reshaping markets more broadly, our recent piece on cybersecurity stocks positioned for AI-fueled growth explores similar themes in the technology sector.
Investment Outlook: Amazon vs. Walmart in 2026
For investors weighing AMZN against WMT, the decision ultimately comes down to growth versus stability. Amazon offers higher revenue growth, margin expansion potential, and exposure to secular technology trends. Walmart offers dividend income, defensive positioning, and decades of operational excellence in physical retail.
Wall Street consensus estimates suggest Amazon could reach $800 billion in annual revenue by 2027, while Walmart is expected to grow at a more modest 4-5% annually. However, Walmart’s consistent profitability and lower valuation multiples make it attractive for income-focused and value-oriented investors.
According to Bloomberg data, institutional investors have been rotating toward Amazon in recent months, with hedge fund ownership increasing 8% quarter-over-quarter. This shift reflects growing confidence in Amazon’s ability to monetize its AI investments.
Final Thoughts
Amazon surpassing Walmart in annual revenue is more than a symbolic milestone – it represents a fundamental change in how the global economy operates. The era of purely physical retail dominance is over, replaced by a hybrid model where technology, data, and logistics determine the winners.
Both companies remain excellent businesses with distinct competitive advantages. But for the first time in decades, the world’s largest retailer is no longer a store you can walk into – it’s an app, a cloud platform, and a delivery network that reaches your doorstep in hours.
The retail sector will continue evolving rapidly in 2026 and beyond. Investors who understand the structural forces driving this transformation will be best positioned to capitalize on the opportunities ahead.
