Amazon (NASDAQ: AMZN | AMZN Price Prediction) and Walmart (NYSE: WMT) reported fourth-quarter results in February. Both companies are chasing the same consumer dollar, but their results reveal two fundamentally different businesses with two very different bets on where retail goes next.
AWS Carries Amazon. Physical Stores Carry Walmart.
Amazon’s headline number looked clean: $213.39 billion in revenue, up 13.6% year over year, with operating income rising 17.8% to $24.98 billion. The real story sat inside Amazon Web Services (AWS), which posted $35.58 billion in revenue, growing 24%, its fastest pace in 13 quarters. Advertising added $21.32 billion, up 23%. Cloud and ads are where the margin lives.
CEO Andy Jassy framed the quarter with characteristic ambition: “AWS growing 24% (our fastest growth in 13 quarters), Advertising growing 22%, Stores growing briskly across North America and International, our chips business growing triple digit percentages year-over-year — this growth is happening because we’re continuing to innovate at a rapid rate, and identify and knock down customer problems.”
Walmart’s quarter was surprisingly strong. Revenue reached $190.66 billion, up 5.6%, beating estimates by 3.59%. eCommerce grew 27% in the U.S. and now represents 23% of Walmart U.S. net sales, a record. Store-fulfilled expedited delivery grew more than 50%, reaching 95% of U.S. households in under three hours. Walmart is turning its 4,600-plus store footprint into a logistics network, and it’s working.
| Business Driver | Amazon (Q4 FY25) | Walmart (Q4 FY26) |
|---|---|---|
| Primary profit engine | AWS cloud + advertising | Omnichannel retail + advertising |
| eCommerce growth | Online stores +10% | U.S. eComm +27% |
| Advertising revenue | $21.32B (+23%) | ~$6.4B full-year (+37%) |
| Free cash flow (annual) | $11.19B (-37% YoY) | $14.92B (+17.9% YoY) |
One Is Returning Cash. Other Is Building an AI Empire.
Amazon plans to spend approximately $200 billion in capital expenditures across 2026, primarily on AI infrastructure, custom chips, and low-earth-orbit satellites. Jassy was direct: “With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026, and anticipate strong long-term return on invested capital.” That spending compressed free cash flow sharply, even as operating income expanded.
Walmart is running the opposite playbook. Capex targets roughly 3.5% of net sales in FY27. Free cash flow grew 17.9% to $14.92 billion. The company raised its annual dividend to $0.99 per share for FY27 and authorized a new $30 billion share repurchase program.
| Lens | Amazon | Walmart |
|---|---|---|
| 2026 capex plan | ~$200B | ~3.5% of net sales |
| Dividend | None | $0.99/share FY27 |
| Trailing P/E | 29.49x | 45.08x |
| Analyst price target | $280.47 | $136.02 |
Tariffs and Valuation Are the Next Tests
Both companies flagged tariff and trade policy uncertainty as a meaningful risk heading into 2026. For Walmart, which sources heavily from overseas suppliers, tariff pass-through decisions will pressure gross margins and test its relationship with upper-income shoppers. For Amazon, the risk touches its third-party seller ecosystem, where margin pressure on sellers could slow marketplace growth.
Valuation is the sharper near-term question for Walmart. At a trailing P/E of 45x and a forward P/E of 42x, Walmart is priced for consistent execution with little room for error. Amazon trades at 29.5x trailing earnings, though free cash flow compression from its capex surge is a real concern for investors who want cash generation today.
Amazon vs. Walmart: Weighing the Trade-offs
Amazon’s YTD stock performance reflects the tension: shares are down 8.28% year to date as of late March, while Walmart has gained 10.69%. That divergence makes Amazon more interesting at current levels. Analyst consensus targets $280.47 against a current price near $211, and with 48 buy ratings and zero sell ratings, professional conviction remains high.
Walmart fits investors who want dividends, buybacks, and steadier returns tied to a genuinely transformed logistics model. The free cash flow is real, the shareholder return program is active, and the eCommerce acceleration is credible. At 45x earnings, the premium demands consistent execution.
Amazon may appeal to investors who can tolerate near-term FCF pressure and believe the capex cycle will compound into durable cloud and AI leadership. AWS reaccelerating to 24% growth is the kind of signal that matters more than one quarter of compressed free cash flow. Walmart becomes more compelling if its valuation pulls back closer to 35x, where the omnichannel story carries more appeal without the price risk.
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