The Revenue Crown Has Changed Hands. The More Consequential Race Hasn’t.

Strip Amazon Web Services out of Amazon’s 2025 results and the company’s revenue drops to roughly $588 billion, well behind Walmart’s $713.2 billion. That single fact reframes everything about the milestone the business press spent last week celebrating. Amazon did not surpass Walmart by becoming a better retailer. It surpassed Walmart by building a cloud computing business that generates more than half the company’s operating profit from a segment that has nothing to do with selling consumer goods. The revenue crown changed hands. The retail rivalry is a different conversation entirely.

That distinction matters because the real competition between these two companies is not about who posts the larger annual number. It is about who controls the commercial infrastructure that sits between brands and their buyers: the discovery layer, the advertising stack, the fulfillment network, the data that feeds all three. Both companies are building toward that position from different directions, with different capital philosophies and different relationships with suppliers. For CPG and retail leaders, understanding those differences is more useful than tracking the scoreboard.

The Business Amazon Is Actually Building

Amazon’s $716.9 billion in 2025 revenue grew 12% year over year, but the growth engine is not the storefront. AWS generated $128.7 billion in revenue and $45.6 billion in operating income last year, accounting for more than half of Amazon’s total operating profit on less than one-fifth of its revenue. Third-party seller services, encompassing the commissions, fulfillment fees, shipping charges, and advertising support that brands and sellers pay to operate on the platform, added another 24% of total revenue on top of that.

What this means in practice is that Amazon’s retail operation is increasingly the surface through which it monetizes a much larger infrastructure business. Brands pay to be listed, pay to be visible, pay to be fulfilled, and pay again to be discovered. Each of those fees funds the warehouse network, the ad technology, and the cloud infrastructure that make the platform indispensable. The dependency runs in one direction, and that is not a criticism of the model. It is a description of the leverage it creates.

Amazon’s advertising business generated $68.9 billion in 2025, more than YouTube’s total ad revenue and growing 19% year over year. Advertising now contributes an estimated majority of Amazon’s e-commerce profit despite representing less than 9% of its gross merchandise value. For brands accustomed to thinking of Amazon as a retail partner, the more accurate frame is that Amazon is a media company with a fulfillment operation attached.

Walmart’s Margin Transformation

Walmart did not lose its revenue lead because it stumbled. Its sales have more than doubled over the past two decades, its U.S. e-commerce business grew 27% in the most recent fiscal quarter, and it has posted double-digit digital growth for 15 consecutive quarters. What changed is that Amazon built revenue streams Walmart did not have, and Walmart responded by building revenue streams it once had no interest in pursuing.

The results of that effort are showing up in the profit line. According to Walmart’s most recent earnings, advertising and membership income together accounted for fully a third of the company’s quarterly operating profit. Walmart reported $6.4 billion in global advertising revenue for 2025, up 37% year over year, with its U.S. Walmart Connect business growing 41%. For context, that figure exceeds what Snapchat generated in advertising last year from a platform with roughly one billion users. The gap with Amazon remains wide, but the trajectory is what brands and agency partners should be tracking.

According to eMarketer projections, Amazon and Walmart together are on pace to capture more than 89% of incremental retail media spending in 2026 as total U.S. retail media ad spend approaches $70 billion. For CPG companies, that concentration has a direct operational consequence: the cost of selling on either platform now includes not just logistics and trade investment but the advertising spend required to maintain visibility in algorithms both companies actively design to favor paid placements. Marketplace Pulse data shows Walmart Connect has grown between 22% and 33% every quarter since the company began reporting the metric consistently, outpacing both overall sales growth and e-commerce growth in every comparable period. What Amazon sellers learned over the past decade, that advertising on the platform is not optional and that its cost grows faster than the underlying business, Walmart sellers are learning now.

Grocery: Where the Structural Gap Is Widest

Grocery is where the competitive picture diverges most sharply, and it is the category that matters most to the largest segment of CPG suppliers. Groceries represent approximately 60% of Walmart’s total sales. Most of Walmart’s online growth is driven by food. Its grocery penetration reached a record 72% in its most recent fiscal year, and grocery e-commerce grew by double digits in the fourth quarter, led by fresh and pantry items fulfilled through its store network.

Amazon has invested seriously in closing this gap. U.S. Prime members received more than 8 billion items same or next day in 2025, a 30% increase over the prior year, with groceries and everyday essentials making up half of the total. The company is testing 30-minute delivery in select markets, expanding same-day grocery coverage to more than 2,300 U.S. cities, and planning more than 100 new Whole Foods locations in the coming years, alongside exploration of a Walmart-style supercenter format.

None of that changes the structural reality. Grocery at scale requires physical density, supplier relationships, cold chain infrastructure, and consumer trust built over decades. Walmart has all of it. Amazon is still acquiring it. For food and beverage brands, Walmart remains the primary partner where volume, in-store execution, and category management drive brand health, and that will not shift materially within the planning horizon most CPG leaders are working against.

Two AI Strategies, One Unresolved Question

Both companies are spending heavily on artificial intelligence and both are seeing early commercial returns. The strategic difference is in who builds versus who buys, and that choice reveals where each company believes its durable advantage lies.

Amazon is building from the infrastructure out. Its $200 billion capital expenditure commitment for 2026, the largest among the major cloud providers, is directed primarily toward data centers, chips, and networking. Its Rufus shopping assistant, developed internally, was used by more than 300 million customers in 2025 and generated nearly $12 billion in incremental annualized sales by Amazon’s own measure. Rufus now carries agentic capabilities through its Buy for Me feature, which can complete purchases from other retailers’ websites on a customer’s behalf, extending Amazon’s commercial reach beyond its own marketplace.

Amazon’s relationship with third-party AI shopping agents is more layered than it has been portrayed. The company spent much of late 2025 blocking external agents from accessing its platform and sued Perplexity in November over its Comet browser making unauthorized purchases on behalf of users. At the same time, CEO Andy Jassy said on an earnings call that Amazon expects to partner with third-party agents over time, and the company posted a corporate development role specifically focused on agentic commerce partnerships. Amazon is not simply closed to the agentic future. It is trying to control the terms on which that future arrives, protecting tens of billions in advertising revenue while building its own agentic layer before ceding that ground to others.

Walmart’s approach is structurally different. Rather than developing foundational AI capabilities, the company has pursued partnerships, integrating with Google’s Gemini and OpenAI’s ChatGPT to surface Walmart products inside those interfaces, while building Sparky, its own shopping assistant, on top of third-party technology. According to Walmart’s earnings call, Sparky users have an average order value roughly 35% higher than customers who don’t use the tool, and about half of Walmart’s app users have now engaged with it. Walmart’s CFO framed the philosophy directly: let technology companies build the technology, and focus Walmart’s energy on translating it into retail experiences. That is a sound capital allocation argument. It also means Walmart’s AI-driven discovery layer depends on relationships it does not fully control, which becomes a more exposed position as agentic commerce determines which products consumers see before a purchase decision is ever made.

The Leverage Is Already Shifting

The practical implications for CPG and retail suppliers are not abstract. Both retailers are building models in which the margin on a product sale matters less than the monetization of the transaction layer surrounding it. Advertising, data, fulfillment services, and membership ecosystems are where the profit growth lives. Suppliers sit inside that system whether they engage with it strategically or not.

The most immediate pressure point is retail media. Brands that have grown their Walmart digital business over the past two years without proportionally investing in Walmart Connect are likely already experiencing the consequences in search visibility and algorithmic placement. The dynamic that reshaped Amazon seller economics over the past decade is replicating at Walmart on a compressed timeline. Treating retail media as a budget conversation separate from trade and shopper marketing is a structural error at this stage of both platforms’ development.

The agentic commerce question requires a longer planning horizon but should not wait. If AI assistants increasingly initiate and complete purchases before a consumer ever opens a retailer’s app or website, then brand visibility inside those AI interfaces becomes as commercially important as shelf placement. Neither Amazon nor Walmart has fully resolved how advertising will function in an agentic environment. Walmart U.S. CEO David Guggina acknowledged as much on the earnings call, noting the company is still working out how advertising operates alongside agentic commerce. That ambiguity is an opening for brands willing to engage early, and a compounding disadvantage for those waiting for the model to stabilize before paying attention.

Amazon will likely hold its revenue lead. The more important question for anyone who sells through either platform is who controls the moment a consumer decides what to buy. That is the race still being run, and its outcome will shape supplier negotiations, media investment, and brand strategy for the better part of this decade.

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