Walmart Is Outperforming Amazon

By Douglas A. McIntyre Updated Jul 29, 7:13AM EDT · Published Jul 28, 9:30AM EDT

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Walmart Is Outperforming Amazon — © Joe Raedle / Getty Images News via Getty Images

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Walmart Inc. (NYSE: WMT | WMT Price Prediction) stock is outperforming Amazon.com Inc. (NASDAQ: AMZN) stock this year.
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So far this year, the impossible has happened. The leader in e-commerce retail, which is supposed to have displaced the bricks-and-mortar part of the industry, isn’t doing so, at least by stock market measures. Walmart Inc. (NYSE: WMT), the largest brick-and-mortar retailer by far, has a stock that is up 32% this year, while Amazon.com Inc. (NASDAQ: AMZN) is up only 14%.

Walmart has proven that skeptics are wrong. Its 4,600 U.S. stores have continued to produce tens of billions of dollars in revenue while maintaining strong margins. It has also entered the e-commerce market very successfully. Walmart is the only brick-and-mortar retailer that has done nearly as well, including direct rivals Target and Costco. Target is in trouble.

In the most recently reported quarter, Walmart’s U.S. sales rose nearly 5% to $109 billion, and operating income was up 7% to $5.3 billion. Management commented, “Global eCommerce sales grew 21%, led by store-fulfilled pickup & delivery and marketplace.” That means Walmart successfully sells things online and gets people to pick them up at stores, saving shipping costs.

Walmart also benefits from low investor expectations. Amazon’s share price is tightly tied to its AWS cloud business and a move into AI. Cloud computing is highly competitive. The billions of dollars big tech companies have put into AI and will do so in the future have an uncertain payoff. A recent market sell-off in AI-related stocks shows investor anxiety about potential profits, at least in the short term.

Walmart is doing well because its revenue and profits are high in a simple business with modest risk. Amazon’s AI and cloud businesses are not nearly as simple and are riskier.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.