Amazon's annual revenue surpasses Walmart for the first time; the retail giants ramp up the AI competition.

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Amazon has surpassed Walmart in annual revenue for the first time, becoming the company with the highest yearly earnings.

Walmart announced Thursday that its annual revenue for the most recent fiscal year was $713.2 billion, slightly below Amazon’s $716.9 billion. In fact, this milestone had shown signs earlier; about a year ago, Amazon surpassed Walmart in quarterly sales for the first time.

This change in ranking is largely symbolic, but it underscores the competition between these two retail giants to define and keep up with evolving consumer preferences. As artificial intelligence reshapes the way businesses operate, their profit models, and methods that drive sales, they are entering a new chapter in this rivalry.

Amazon’s rise to the top in revenue is not just due to its massive online store and promise of rapid delivery. While its core retail business is the largest source of income, its vast cloud computing, advertising, and seller services segments are also fueling sales growth:

According to the latest annual filing, third-party seller services—including commissions and fees for Amazon fulfillment, as well as shipping, advertising, and customer support fees—accounted for about 24% of Amazon’s total sales in 2025. Amazon Web Services accounted for about 18%.

Walmart’s loss of the top spot is not due to weakness; its revenue has more than doubled over the past 20 years. Walmart relies on its more than 4,600 Walmart stores and around 600 Sam’s Club locations in the U.S. to drive its digital business, which grew 27% in the fourth quarter of the most recent fiscal year in the U.S., achieving double-digit growth for 15 consecutive quarters.

This expansion happened as Walmart borrowed from Amazon’s model, trying to position itself as not just a retailer, but as a tech company.

Walmart’s ambition has shown in several ways: In early December, Walmart moved its stock listing from the New York Stock Exchange to the tech-focused Nasdaq. Earlier this month, Walmart’s market cap surpassed $1 trillion—a valuation previously achieved almost exclusively by tech companies, including Amazon.

Moreover, Walmart's fourth-quarter earnings were boosted by digital advertising and third-party marketplace business, reflecting its strategy to emphasize higher-margin businesses and move beyond traditional retail thinking.

Amazon and Walmart’s Artificial Intelligence Ambitions

Walmart’s recent push for third-party marketplace growth is a response to Amazon’s dominant platform. Even as Walmart tries to catch up in certain areas, it’s also seeking advantage in new frontiers.

Over the past several years, Amazon and Walmart have taken different AI strategies to improve operational efficiency and make products more attractive to consumers.

In October, Walmart partnered with OpenAI’s ChatGPT, and in January with Google’s Gemini, to make its products easier to find and purchase. It also has its own AI shopping assistant, Sparky. This virtual assistant, which looks like a smiley face, appears in the Walmart app to help shoppers find items.

Like many companies, Walmart is still in the early stages of applying AI, and it’s unclear how this technology will affect its business in the long run.

During Thursday’s earnings call, Walmart CEO John Furner said that when customers use Sparky, spending increases—the average order value for customers using Sparky is about 35% higher than for those not using it.

Walmart U.S. CEO David Guggina said on the call that about half of Walmart app users have used Sparky. “Agent-based AI is increasingly embedded across all areas of Walmart. It is strengthening our operations, increasing employee productivity, and improving customer experience.”

Walmart CFO John David Rainey said AI investment is included in the company’s annual capital spending plan and is expected to account for about 3.5% of sales. These expenses also include investments in automation and store renovations.

However, Walmart’s tech ambitions have limits. Speaking about AI, Rainey said Walmart will rely on the expertise of technology companies instead of developing products itself:

As you can see from our announcements, we advance AI development through partnerships. This allows tech companies to do what they do best—develop innovative technology—and lets us focus on what we do best—turn the best technology into retail experiences that create value for customers, members, and businesses.

Similar to Walmart, Amazon faces new pressure to respond to the rise of agent-driven e-commerce. Chatbot companies like OpenAI, Google, and Perplexity have launched automated e-commerce features aiming to change how people shop online.

While companies like Walmart, Etsy, and Shopify have announced shopping partnerships with AI platforms, Amazon has adopted a more cautious stance. It blocks agents from accessing its website and is ramping up its own shopping chatbot, Rufus, powered by Amazon’s own models and Anthropic’s chatbot, Claude.

Amazon says Rufus has been used by over 300 million customers and brought nearly $12 billion in new annualized sales last year. After a slow beta launch two years ago, Amazon has integrated Rufus into more areas of its app and website to encourage shoppers to use the tool.

Amazon CEO Andy Jassy said last month that Rufus and other AI tools can assist customers in finding products, much like staff in a physical store. “I believe agents will help customers in this discovery. That’s one reason we are investing so much in our shopping assistant Rufus.”

Meanwhile, Amazon is investing heavily in AI infrastructure. Earlier this month, the company announced it would invest up to $200 billion in AI projects this year, more than any other hyperscale cloud provider, whose combined spending is projected to reach nearly $700 billion by 2026. Most of Amazon’s spending is expected to go toward data centers, chips, and network equipment.

Amazon’s investment is not limited to AI computing power. The company is pouring resources and talent into developing AI tools across all its business areas; it has launched a series of AI models and upgraded the Alexa assistant; and, since 2023, has invested $8 billion in Anthropic.

Wall Street, however, is skeptical about Amazon’s capital spending plans. After its earnings release on February 5, Amazon’s stock price fell for nine straight days, wiping out more than $450 billion in market value.

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