Amazon (AMZN) quarterly sales beat those of Walmart (WMT) for the first time in what could be something of a changing of the guard moment, though the crown for the world’s largest retailer is not being handed over meekly. AMZN posted $187.8 billion in revenue during the fourth quarter, exceeding the $180.5 billion reported by WMT yesterday.
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Walmart, usually called the world’s largest retailer, has been the biggest revenue earner since it overtook Chevron (CVX) in 2012.
Amazon is not expected to take the crown away just yet, however, with analysts expecting current Fiscal full-year sales of $700.8 billion, compared with $708.7 billion for Walmart. Amazon expects sales this quarter to be between $151 billion and $155.5 billion. WMT estimates net sales of $159.9 billion for the same period.
AMZN Has More than Retail
Amazon’s online retail business remains its top revenue driver with sales of $75.6 billion in the Fiscal fourth quarter, but it’s also earning big bucks on third party seller services, which includes items like commissions and fees on fulfilment and shipping. Revenues from this income stream rose 9% to $47.5 billion.
And while AMZN’s overall sales rose 10% in the last quarter, its AWS cloud segment sales increased 19% year-over-year to $28.8 billion, or around 17% of the total. The cloud business has more than doubled revenues since 2020. Meanwhile its ad business saw a 17% rise in revenues in Q4 to $17.3 billion, approaching 10% of its total sales.
WMT Takes a Leaf from AMZN’s Book
From bookseller to online retail behemoth and AI cloud giant, the journey taken by Amazon has delivered some lessons for Walmart, and it’s paying off.
“We’re growing profit faster than sales, and we have runway to scale our higher-margin businesses like
membership, marketplace and advertising. We’re mixing ourselves up,” Walmart CEO Doug McMillon said on the earnings call.
While WMT’s advertising business and third-party marketplace is relatively small in comparison, they are growing and posting better margins than the retail business.
Its subscription business Walmart+, which competes with Amazon Prime, posted double-digit growth as membership and other income increased 33%, while its global advertising business grew 29%, which included a 24% rise for Walmart Connect in the U.S. Global advertising grew 27% to about $4.4 billion over the last year, said CFO John Rainey on the earnings call.
Revenues from WMT’s third-party marketplace and fulfilment services segment also rose by double digits. And even in the Amazon-dominated field of online retail, Walmart saw e-commerce sales rise 16% globally, and were up 20% in the U.S.
AMZN vs WMT: Which is the Better Stock?
Wall Street has a Strong Buy consensus rating on WMT stock, based on 24 Buys and one Hold. The average WMT price target of $112.78 suggests 16% upside.
AMZN has a Strong Buy consensus based on 47 Buys and one Hold rating. The average AMZN price target of $268.91 implies over 20% upside.
Using the TipRanks Stocks Comparison Tool we can see AMZN is up by a third in the last year while WMT has risen almost 70% in that time.
