It's Official: Walmart Is No Longer the Largest Retailer. This Magnificent Growth Stock Just Took the Title Away.

Ladies and gentlemen, there's a new name at the top of the retail industry: In the fourth quarter of 2024, Amazon (NASDAQ: AMZN) generated net sales of $188 billion. By comparison, Walmart (NYSE: WMT) generated revenue of $181 billion, marking the first time it ever came in below Amazon.

For what it's worth, Walmart still took the top spot for the year. The company grew its revenue by 5% year over year to $681 billion, which was well ahead of Amazon's full-year net sales of $638 billion.

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However, considering Amazon is growing roughly twice as fast as Walmart right now, it's likely that Amazon will pass Walmart on a full-year basis in 2025.

Here's what Amazon has done to take away Walmart's crown and what it will keep doing in the coming years to stay atop the world of retail.

What's driving Amazon's growth?

Sales on Amazon's website are the largest part of the business, and this is what many people think of when they think about the company. But it's important to note that its biggest growth is occurring elsewhere in the business.

For starters, Amazon sells things on its website but enables third-party sales, as well. When it comes to facilitating third-party sales, the company makes money with things such as commissions and fulfillment fees. In Q4, this was a $47 billion revenue stream, jumping 9% year over year and helping it move ahead of Walmart.

Additionally, Amazon's advertising business is one of its fastest areas of growth. Q4 advertising revenue of $17 billion is still relatively small but was up 18% and has plenty of more room to grow. Launching its advertising business and ramping it up in recent years has been a great catalyst for growth because Amazon leverages the digital platform that was already built.

Finally, the Amazon Web Services (AWS) cloud-computing business continues to deliver outsized financial results. After growing by just 13% in the fourth quarter of 2023, AWS delivered 19% growth in the most recent quarter. That's an impressive growth rate, considering that AWS generated more than $100 billion in revenue in 2024.

With all of these business segments booming, Amazon's business is now bigger than Walmart's business and the reason the company's stock has performed so well. And ongoing growth points to good future returns for shareholders, too.

Don't completely overlook Walmart

Walmart might not officially be the biggest name in retail anymore, but investors shouldn't overlook the company now that's it's in Amazon's shadow.

Like Amazon, Walmart is commendably growing its digital-advertising business, with revenue increasing 27% to $4.4 billion in 2024. Its recent acquisition of smart-TV company Vizio is just one way that the company can continue growing advertising revenue in coming years.

For its part, Vizio generates a portion of its revenue from advertising on its smart-TV operating system, which will dovetail nicely with Walmart's advertising business and wealth of consumer data. Considering how thin profit margins are for the retail business, a higher-margin digital-advertising revenue stream can actually make a material difference with the overall financials.

That said, investors should be aware that Walmart doesn't anticipate anything special in 2025. This year, management only expects to grow sales by around 4% and to grow profits by around 5%. So this modest forecast could keep shares grounded for a time, especially considering the stock trades at an elevated price-to-earnings (P/E) valuation, as the chart below shows.

WMT PE Ratio data by YCharts.

In conclusion, Walmart stock could be a good investment at the right price because the company is a dominant retail player doing things that boost profitability. But today, Amazon stock is the better buy. It's superior growth has finally allowed it to surpass Walmart's size. And that superior growth rate appears poised to continue, potentially carrying Amazon stock to strong gains.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.