Amazon Surpasses Walmart in Revenue, Fueling Growth Hopes
Key Takeaways:
* Amazon's revenue surpasses Walmart's for the first time in a decade.
* Despite its initial focus on retail, Amazon's expansion into cloud computing, streaming video, and AI has driven its growth trajectory.
* Retail remains Amazon's largest revenue source, despite the buzz surrounding its cloud business.
* Amazon's stock has outperformed Walmart's significantly since its market cap surpassed in 2015.
Market Cap Milestone and Revenue Performance
On July 24, 2015, Amazon's market cap exceeded Walmart's. It took nearly a decade for its revenue to follow suit. In Q2 2015, Amazon's revenue stood at $23.2 billion, approximately one-fifth of Walmart's. As of its Q4 2023 earnings, Amazon posted sales of $187.8 billion, a 10% increase. Walmart's revenue, expected to be reported on Feb. 20, is projected to rise by 4% to $180 billion.
Growth-Oriented Investment
Amazon's initial growth was driven by its aggressive expansion into new markets. While its revenue remained smaller than Walmart's, investors recognized the company's growth potential. Amazon had not yet achieved consistent profitability, but its prospects for future growth fueled its stock's climb.
Diversification Beyond Retail
Amazon's continued success can be attributed to its diversification beyond traditional retail. Cloud computing, streaming, and AI have emerged as key contributors to its revenue stream. Despite the prominence of these segments, retail remains Amazon's primary earnings driver, accounting for a larger portion of revenue than Amazon Web Services.
Investor Returns and Future Prospects
Investors who purchased Amazon stock when its market cap surpassed Walmart's have experienced substantial returns. As of Thursday's record close, Amazon's stock has gained 802% compared to Walmart's 331%. This reflects the market's confidence in Amazon's growth story and its ability to continuously innovate and adapt to changing market conditions.