Amazon has officially ended Walmart’s 13-year reign as the world’s largest company by revenue, reporting $717 billion in 2025 sales compared with Walmart’s $713 billion. While the headline marks a symbolic milestone in global retail history, the deeper story lies in business model evolution. Amazon’s ascent reflects not only e-commerce scale, but also the growing dominance of cloud computing, digital advertising, and subscription ecosystems — sectors that carry structurally higher margins and capital-light scalability.

Diversification Drives Amazon’s Breakthrough

Amazon’s retail operations remain its largest revenue engine, generating approximately $464 billion from online stores, physical outlets, and third-party marketplace sales. However, the company’s strategic pivot beyond retail is what ultimately tipped the scales.

Amazon Web Services (AWS) delivered nearly $129 billion in revenue in 2025, providing computing infrastructure, storage solutions, and artificial intelligence capabilities to enterprises and governments globally. AWS continues to serve as Amazon’s primary profit driver, offsetting thinner margins in core retail operations and insulating overall earnings from cyclical consumer demand.

In addition, Amazon generated more than $100 billion from advertising and Prime subscriptions combined — a recurring revenue stream that enhances customer stickiness while boosting monetization efficiency. For investors, this revenue mix increasingly positions Amazon less as a traditional retailer and more as a diversified technology conglomerate.

Walmart’s Resilience and Strategic Repositioning

Despite relinquishing the revenue crown, Walmart remains financially robust. More than 90% of its revenue still stems from physical stores and e-commerce operations, underscoring its continued reliance on consumer retail fundamentals. Yet operational momentum remains strong.

U.S. comparable sales grew 4.6% last quarter, driven by increased transaction counts and continued share gains among middle- and upper-income households seeking value amid economic uncertainty. Walmart’s expanding omnichannel capabilities, including store-fulfilled delivery and marketplace growth, have narrowed the competitive gap with Amazon in convenience and speed.

Importantly, Walmart recently surpassed a $1 trillion market capitalization — becoming the first traditional retailer to reach that milestone. Its move to shift its stock listing to the Nasdaq further signals management’s intent to be viewed as a technology-enabled platform rather than solely a brick-and-mortar retailer.

A Broader Retail and Market Implication

For U.S. and Israeli investors alike, the leadership change reflects more than a numerical milestone. It highlights the structural premium markets assign to diversified revenue streams, scalable infrastructure, and AI-driven ecosystems. Amazon’s advantage lies in monetizing digital infrastructure alongside consumer demand, reducing dependence on discretionary retail cycles.

However, Walmart’s performance demonstrates that physical retail remains highly relevant when paired with data analytics, supply chain efficiency, and disciplined pricing. The competitive dynamic increasingly centers on ecosystem integration rather than store count.

Looking ahead, the key variable will be margin durability. Amazon must continue proving that AWS and advertising growth can outpace retail volatility, while Walmart must sustain traffic growth without sacrificing profitability in a value-sensitive environment. The retail battleground has shifted from shelves to servers — and the next decade may hinge less on store expansion and more on technological leverage.