^{Photo: Bloomberg.com}

For the first time in modern retail history, Amazon has edged ahead of Walmart in annual revenue, marking a symbolic but significant turning point in the decades-long rivalry between the two giants. The milestone highlights how technology-driven diversification — from cloud infrastructure to digital advertising — is reshaping what it means to be the world’s largest retailer.

A Historic Revenue Crossover

Amazon reported roughly $716.9 billion in annual sales, narrowly surpassing Walmart’s $713.2 billion for its latest fiscal year. The gap of just under $4 billion may appear modest relative to the scale of both companies, yet it represents a major shift in the global retail hierarchy.

The crossover had been building for several quarters as Amazon’s revenue growth outpaced Walmart’s, fueled by expanding high-margin business lines and steady gains in e-commerce volume. Even so, Walmart’s performance remained strong, with revenue more than doubling over the past two decades and continuing to grow at a healthy clip.

How Amazon Built a Multi-Engine Revenue Machine

Amazon’s ascent reflects the breadth of its business model. While online retail remains its largest segment, several adjacent divisions have become powerful growth drivers. Third-party seller services — including commissions, fulfillment fees, and logistics support — now account for roughly a quarter of total revenue.

Meanwhile, Amazon Web Services contributes close to one-fifth of company sales and an even larger share of operating profit, underscoring the importance of enterprise cloud computing to Amazon’s financial strength. Its rapidly expanding advertising unit has also evolved into a multibillion-dollar business, benefiting from the company’s vast trove of shopper data and marketplace traffic.

Together, these segments illustrate how Amazon has transformed from an online bookstore into a diversified technology platform spanning retail, logistics, media, and enterprise software.

Walmart’s Growth Story Remains Intact

Despite losing the top revenue spot, Walmart continues to post robust growth and operational momentum. Its more than 4,600 U.S. stores and approximately 600 Sam’s Club locations provide a nationwide fulfillment network that supports its fast-growing e-commerce operations.

Digital sales in the U.S. rose by about 27% in the most recent fourth quarter, extending a streak of double-digit growth to 15 consecutive quarters. Walmart has also leaned heavily into higher-margin businesses such as digital advertising and its third-party marketplace, mirroring elements of Amazon’s strategy.

The retailer’s evolution into a tech-enabled platform has been reflected in capital markets as well, with its valuation surpassing the $1 trillion threshold after a strong run in its share price.

The AI Arms Race Reshaping Retail

A defining feature of the next phase in the rivalry is artificial intelligence. Amazon is pursuing a vertically integrated strategy, investing heavily in proprietary models, infrastructure, and applications. Its shopping assistant Rufus, embedded across its app and website, has reportedly been used by hundreds of millions of customers and generated billions in incremental sales.

The company is also committing massive capital to AI infrastructure — including data centers, networking, and custom chips — with spending plans reaching into the hundreds of billions of dollars over the coming years. These investments aim to strengthen both its consumer-facing tools and its cloud offerings.

Walmart, by contrast, is adopting a partnership-driven approach. Collaborations with major AI developers power features such as its in-app assistant Sparky, which helps customers discover products and reportedly boosts average order values by more than one-third among users. Executives say AI is being deployed across supply chain optimization, merchandising, and customer experience, though the company intends to rely on external technology partners rather than build foundational models in-house.

Market Reaction and Investor Outlook

Investors have responded differently to each company’s strategy. Amazon’s aggressive capital expenditure plans have prompted some short-term skepticism on Wall Street, contributing to share price volatility as markets weigh near-term costs against long-term growth potential.

Walmart, meanwhile, has been rewarded for consistent execution and margin expansion in newer business lines, reinforcing the view that it is successfully blending physical retail scale with digital innovation.

A Rivalry Entering a New Era

The revenue reshuffle is largely symbolic, but it underscores a deeper transformation in global commerce. Amazon’s leadership reflects the growing importance of technology platforms, cloud infrastructure, and data-driven services, while Walmart’s trajectory shows how traditional retailers can reinvent themselves through digital capabilities and operational scale.

As AI, automation, and new consumer behaviors continue to reshape the sector, the competition between the two companies is likely to intensify — not just for sales leadership, but for influence over how people shop in an increasingly digital economy.