Comparative Growth Analysis of Amazon and Walmart
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 hours ago
0mins
Should l Buy AMZN?
Source: NASDAQ.COM
- Revenue Growth Comparison: Amazon's compound annual growth rate (CAGR) of 12.7% over the past three years significantly outpaces Walmart's 5.1%, indicating a stronger position in market share competition and greater future growth potential.
- Superior Financial Performance: In Q4 2023, Amazon achieved a 14% year-over-year revenue growth, with cloud computing (AWS) and online advertising segments exceeding 20% growth, while Walmart's revenue growth was only 5.6%, showcasing Amazon's success in diversifying its revenue streams.
- Clear Valuation Advantage: Amazon's price-to-earnings (P/E) ratio stands at 34.7, lower than Walmart's 45.3, and combined with faster revenue and net income growth, Amazon presents a more attractive investment opportunity with higher margin of safety.
- Strong Market Adaptability: Although Walmart has performed well over the past five years, Amazon's diversification strategy and higher profit margins position it more favorably for future market competition, particularly in the rapidly growing e-commerce and advertising sectors.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 249.700
Low
175.00
Averages
280.01
High
325.00
Current: 249.700
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Capital Expenditure Plan: The company plans to invest $200 billion in capital expenditures for 2026, which led to a stock price drop in early February; however, this investment will enhance its infrastructure and service capabilities, supporting future growth.
- Market Sentiment Shift: Amazon's stock has surged 25% since March 27, reflecting investor confidence in the company's long-term potential, even as its price-to-earnings ratio increased from 15.5 to 19.1, indicating optimism about future earnings.
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See More
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- Sales Growth: Amazon anticipates a net sales figure of $717 billion for 2025, reflecting a 9% year-over-year increase, indicating robust retail performance despite tariffs and economic volatility, showcasing its market adaptability.
- Capital Expenditure Plan: The company plans to invest $200 billion in capital expenditures for 2026, which led to a stock price drop in early February; however, this investment will enhance its infrastructure and service capabilities, supporting future growth.
- Market Sentiment Shift: Amazon's stock has surged 25% since March 27, reflecting investor confidence in the company's long-term potential, even as its price-to-earnings ratio increased from 15.5 to 19.1, indicating optimism about future earnings.
- Importance of Retail Business: While Amazon Web Services garners significant attention, its retail operations still account for over 80% of the U.S. retail market, highlighting substantial growth potential and demonstrating the success of the company's diversified business strategy.
See More
Ackman Seeks $10 Billion for New Fund Amid Market Highs
- New Fund IPO Plan: Bill Ackman is preparing for a $10 billion IPO of his new closed-end fund, Pershing Square U.S., expected to launch this summer, aiming to quickly deploy capital to seize high-quality investment opportunities in the current market.
- Market Valuation Analysis: Despite the S&P 500's forward P/E ratio of 20.4, significantly above historical averages, Ackman believes many undervalued quality companies are available, particularly those with 'durable structural advantages' among large-cap stocks.
- Portfolio Adjustments: Ackman has recently increased his holdings in Meta and Amazon within the Pershing Square portfolio, with Meta trading at a P/E of 22 and Amazon at 32, both showing strong growth potential with expected EPS growth exceeding 20% in the medium term.
- Market Outlook: Ackman anticipates favorable conditions for investors in the second half of the year; despite uncertainties from the Iran conflict, the strong fundamentals and growth potential of high-quality stocks are likely to support price increases, especially with the positive impact of the new tax code on corporate earnings.
See More
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- Investment Opportunity Analysis: Bill Ackman believes many high-quality companies currently have reasonable valuations and plans to invest $10 billion in a newly established closed-end fund, expecting to deploy this capital within weeks to seize the best opportunities in the market.
- Market Valuation Observation: Despite the S&P 500's forward P/E ratio of 20.4, significantly above historical averages, Ackman points out that many large companies deserve higher valuations due to their 'durable structural advantages,' especially in emerging trends like artificial intelligence.
- Stock Selection Strategy: Ackman has increased his holdings in Meta and Amazon, with P/E ratios of 22 and 32 respectively; while these multiples are relatively high, their potential for over 20% annual earnings growth makes them attractive investments.
- Market Outlook: Ackman believes that despite uncertainties surrounding the situation in Iran, the second half of the year will bring favorable conditions for investors, particularly as improving market sentiment will drive the fundamental strengths and growth potential of quality stocks higher.
See More
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- Custom Chip Advantage: Amazon's recent shareholder letter reveals that its custom Graviton chips outperform Intel's by 40% in price performance, allowing Amazon to rapidly gain market share in cloud computing, with expectations for a similar trend in the AI market.
- Trainium Chip Performance: Amazon's Trainium2 chip offers 30% better price performance than GPUs and is nearly sold out, while the next-generation Trainium3 is in development, showcasing Amazon's strong competitive position in the AI training market.
- Collaboration with Nvidia: Despite Amazon's competitive edge in chip performance, it must maintain a strong relationship with Nvidia to ensure resource availability and prevent client losses to competitors, highlighting the importance of collaboration in the tech landscape.
- Sustained Market Demand: While Amazon's custom chips excel, Nvidia's growth rates are accelerating, with projected year-over-year growth rates of 79% and 85% for Q1 and Q2, respectively, indicating robust demand for AI computing power and a potential landscape with multiple winners in the chip market.
See More
Amazon and Nvidia's Intensifying Competition
- Custom Chip Advantage: Amazon's recent shareholder letter highlights its custom chip Graviton's performance, which offers a 40% better price-performance ratio than Intel's chips, rapidly capturing the cloud computing market and demonstrating strong competitiveness in the AI sector.
- Trainium Chip Performance: Amazon's Trainium2 chip provides a 30% better price-performance ratio than GPUs, with capacity nearly sold out, indicating significant potential in the AI training market, while future Trainium3 and Trainium4 chips will further enhance its market position.
- Relationship with Nvidia: Despite the superior performance of Amazon's custom chips, the company will continue to support Nvidia chips to maintain a good partnership, avoiding resource shortages that could lead to client losses, illustrating the complexity of market competition.
- Sustained Market Demand: While Amazon poses a challenge to Nvidia with its chip performance, Nvidia's growth rates are still accelerating, with Q1 and Q2 expected to reach 79% and 85% respectively, reflecting strong demand for AI computing power and suggesting a future market landscape of multiple winners.
See More
Apple's Unique Advantage in AI Investment
- Capital Expenditure Comparison: Apple's capital expenditures for fiscal 2025 were only $12.7 billion, starkly contrasting with Amazon's planned $200 billion for 2026, highlighting Apple's conservative approach to AI infrastructure investment, which may mitigate future financial risks.
- Core Business Advantages: Apple's business model relies on a powerful brand and the integration of hardware, software, and services, as consumers purchase Apple products not just for computing power but to engage in a seamless ecosystem, thereby enhancing customer loyalty.
- Financial Health Status: In the first quarter of fiscal 2026, Apple reported revenue of $143.8 billion, a 16% year-over-year increase, with earnings per share rising 19% to $2.84, showcasing strong performance in its high-margin services segment and reinforcing its market position.
- Future Outlook and Risks: While the iPhone accounts for over half of the company's total revenue, losing consumer interest could impact the business; however, Apple's ability to leverage AI without massive capital expenditures demonstrates its competitive edge in the AI era.
See More
