Walmart and Costco have kicked off 2026 with impressive year-to-date stock gains of over 12% and 9%, respectively, while the S&P 500 is in the red. Both retailers are benefiting from strong e-commerce growth, with Walmart’s U.S. e-commerce sales up 27% and Costco’s by 22.6%. However, despite their successes, they are struggling to capture market share from Amazon, which continues to dominate the e-commerce landscape with a market share increase to 35.7%.
The contrasting valuations between these retailers and Amazon are notable. Walmart and Costco trade at significantly higher earnings multiples—over 21 and nearly 30, respectively—compared to Amazon’s 10.8 times EBITDA. This discrepancy raises questions about the market’s perception of Amazon, particularly as it ramps up capital expenditures for its cloud computing segment, AWS, which is crucial for its profitability.
For market professionals, this presents a compelling opportunity. With Amazon trading at a discount relative to its growth potential, especially in retail and cloud services, it may be an attractive buy for those seeking value in the current market.
Source: fool.com