Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. The company offers branded and private-label products in a range of merchandise categories. It offers merchandise, such as sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; appliances, electronics, health and beauty aids, hardware, garden and patio products, sporting goods, tires, toys and seasonal products, office supplies, automotive care products, postages, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosks, and jewelry; and meat, produce, service deli, and bakery products. The company also operates gasoline, pharmacies, optical, food courts, hearing-aid centers, and tire installation centers; and offers business delivery, travel, grocery, and various other services online. It also operates e-commerce websites. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.

Costco remains a high-quality business with very strong operational efficiency, but the market is already pricing in an almost perfect scenario. Revenue, EBITDA, operating profit, and net profit are growing year over year, which confirms the resilience of the model and the scale of the business. ROE, ROA, and ROI are at high levels and generally support the company’s premium valuation. At the same time, profitability is noticeably below the sector median: gross margin, operating margin, and net profit margin are significantly lower than those of the industry, which is typical for discount retail but limits re-rating potential. Liquidity looks acceptable, however quick ratio and current ratio are below the median, so the margin of safety does not look outstanding. Leverage, on the other hand, is comfortable: debt/equity is low and declining, while long-term debt appears stable, which reduces financial risk. Dividend yield remains very low, so the dividend factor provides almost no support for the current valuation. The main limiting factor is the extremely high P/E, P/B, P/S, and P/FCF multiples relative to the industry, and they remain elevated even after the recent decline. This means investors are paying a significant premium for quality, resilience, and brand strength, but there is limited room for further multiple expansion. In this setup, fundamentals more likely justify maintaining the premium than increasing it. Therefore, the target forecast should be slightly lowered: the business is strong, but the current price already reflects most of the positive factors. For an investor, this is not a story about deep undervaluation, but rather about a high-quality defensive asset with limited upside and a high bar for continued earnings growth.

Costco Wholesale Corporation

Сильный индекс, значительно упал. Быки в растерянности.

Strong index, significantly down. The bulls are confused.

Сильный индекс, без изменений. Рынок не поддерживает быков.

Strong index, flat. The market does not support the bulls.

Средний индекс, незначительно вырос. Отток средств из лонгов снизился, но остается значительным.

Medium index, slightly up. The outflow of funds from longs has decreased, but remains significant.

Costco is strong in revenue and profit growth, but it trades at a very high premium on valuation multiples; the fundamentals support quality, not further multiple expansion.

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Invesco S&P 500 Top 50 ETF (Symbol: XLG) where we have detected an approximate $406.7 million dollar inflow -- that's a 3.7% increase week over week in outstanding units (from 176,880,000 to 183,400,000). Among the largest underlying components of XLG, in trading today Mastercard Inc (Symbol: MA) is up about 0.2%, Costco Wholesale Corp (Symbol: COST) is trading flat, and Oracle Corp (Symbol: ORCL) is higher by about 0.6%. For a complete list of holdings, visit the XLG Holdings page » The chart below shows the one year price performance of XLG, versus its 200 day moving average:
Looking at the chart above, XLG's low point in its 52 week range is $52.60 per share, with $64.7653 as the 52 week high point — that compares with a last trade of $63.16. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Further XLG Research:

XLG, MA, COST, ORCL: ETF Inflow Alert

Walmart Inc. WMT shares have lost 14.3% over the past six months, reflecting a notable cooling in investor sentiment toward the retail giant. The decline is slightly narrower than the industry’s 15% drop, but Walmart has sharply lagged the Zacks Retail – Wholesale sector’s 0.5% dip and the S&P 500’s 12.2% advance over the same period.
The divergence is striking because Walmart’s operating performance remains solid, with continued market share gains and strong digital growth. The pullback appears to reflect a combination of near-term cost and consumer concerns, softer U.S. comparable sales growth and a still-demanding valuation rather than a breakdown in the company’s long-term growth story.
Walmart has also lagged several prominent retail peers over the past three months. Shares of Target Corporation TGT have rallied 34.6 during the period, while Costco Wholesale Corporation COST and Dollar General Corporation DG have declined 10.2% and 9.5%, respectively.
What Is Weighing on Walmart Stock?
Despite Walmart’s resilient operating performance, several factors appear to be weighing on investor sentiment. A key concern is the increasingly challenging consumer backdrop. Management noted that shoppers, particularly those facing tighter household budgets, are making more deliberate spending choices amid elevated fuel costs and broader affordability pressures.
Walmart has responded by stepping up price investments and expanding rollbacks across categories. While this reinforces the company’s value positioning and can support market share gains over time, aggressive pricing can pressure near-term margins before higher volumes fully offset the investment. Management itself noted that the benefits from lower prices can take time to materialize.
Another drag is the health and wellness business, where regulatory changes have created considerable top-line pressure. Pharmacy deflation and brand-to-generic transfers associated with maximum fair price regulation have weighed on Walmart U.S. comparable sales. At the same time, the sales benefit from GLP-1 drugs has moderated from previous years. Management emphasized that these issues are largely affecting reported sales growth rather than undermining the underlying profitability or long-term attractiveness of the health and wellness business.
Cost pressures are another issue. Higher fuel expenses, depreciation tied to elevated capital spending, healthcare costs and self-insurance expenses are limiting operating leverage. Walmart is also reinvesting tariff refunds into lower prices and customer experience, which should strengthen its competitive position but may temper near-term profit growth. These factors, combined with a softer consumer environment, could explain why investors remain cautious despite Walmart’s otherwise healthy business momentum.
Walmart’s Estimate Revisions Signal Near-Term Caution
The Zacks Consensus Estimate for Walmart’s current- and next-fiscal-year EPS has moved lower over the past 30 days. The negative revision trend indicates increasing analyst caution around the near-term earnings trajectory and could restrict meaningful multiple expansion until estimates stabilize or begin moving upward.
Walmart’s Growth Engines Remain Powerful
Despite the near-term concerns, Walmart continues to possess several durable growth drivers that support its longer-term investment case. Its core retail business remains healthy, aided by a strong value proposition, broad assortment and increasing convenience. Walmart continues to gain market share across categories and income groups, including higher-income households. Underlying U.S. sales trends outside health and wellness have remained relatively steady, indicating that regulatory-driven pharmacy weakness does not necessarily reflect deterioration across the broader retail business.
Walmart’s rapidly expanding digital ecosystem remains one of its most important growth avenues. E-commerce continues to post strong growth across Walmart U.S., Sam’s Club and international markets, supported by store-fulfilled delivery and faster fulfillment. The company’s extensive physical store network gives it a significant last-mile advantage, enabling Walmart to combine low prices with increasingly rapid delivery. Higher delivery density, automation and improved fulfillment efficiency are also helping enhance the economics of the digital business.
Walmart is becoming less dependent on traditional retail margins as higher-margin businesses scale. Advertising, marketplace, membership and fulfillment services are becoming increasingly important contributors to growth and profitability. Management indicated that these newer businesses are already accounting for a meaningful portion of profit growth, supporting a structurally better earnings mix.
International expansion provides another avenue for growth as Walmart increasingly deploys its marketplace, membership and digital capabilities across markets. Investments in automation, technology and supply-chain infrastructure should further improve productivity and customer experience. Together, these initiatives strengthen Walmart’s ability to grow sales, deepen customer engagement and expand profitability over the long run.
WMT’s Premium Valuation Reflects Quality
WMT currently trades at a P/E multiple of 34.25, above the industry’s 31.33 and its five-year median of 24.9. The premium appears to reflect Walmart’s defensive business model, consistent market-share gains, expanding digital capabilities and improving contribution from higher-margin businesses such as advertising, marketplace and membership.
Walmart’s multiple is also substantially above Target and Dollar General, which trade at forward P/E multiples of 15.94 and 15.47, respectively. Costco, on the other hand, carries an even richer multiple of 40.01.
The valuation does not necessarily look excessive for a business with Walmart’s scale and consistency, but it does suggest that investors continue to assign meaningful value to successful execution of its growth strategy.
Image Source: Zacks Investment Research
WMT Stock Calls for a Balanced Approach
Walmart’s recent pullback has improved the stock’s entry point, while its long-term growth prospects remain supported by e-commerce, advertising, marketplace, membership and international expansion. Its strong value proposition should also aid continued market share gains.
However, pharmacy deflation, consumer pressure, elevated costs, ongoing price investments and downward earnings-estimate revisions warrant some caution. Given these near-term uncertainties and WMT’s still-premium valuation, a neutral stance appears appropriate. Existing investors may consider holding the stock, while prospective buyers may wait for a more attractive valuation or improving earnings estimate trends.
Walmart currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Should You Buy Walmart Stock After a 14% Decline in Six Months?

Key Points
AbbVie's business has proved resilient in recent years.
Costco has what it takes to navigate its current challenges.
Both stocks have impressive dividend track records.
Israel Englander is a famous and successful hedge fund manager who founded Millennium Management. This hedge fund firm has delivered excellent returns over the past few decades, so it is worth taking a look inside its portfolio. During the second quarter, Izzy Englander and his team made several notable purchase decisions, including increasing their stakes in two dividend-paying companies: AbbVie (NYSE:ABBV) and Costco (NASDAQ:COST). The firm more than doubled its position in both stocks. Should retail investors follow suit?
Image source: The Motley Fool.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
1. AbbVie
AbbVie has faced challenges in recent years, including a major patent cliff and clinical setbacks that have weighed on the stock. Somehow, the company always manages to bounce back. AbbVie's shares have moved in line with the S&P 500 this year, and they may continue doing so -- and perhaps even outpace broader equities -- over the medium term. Consider several reasons why. First, AbbVie's core business is rock-solid.
The company's two growth pillars, the immunology medicines Skyrizi and Rinvoq, are doing much of the heavy lifting. In the second quarter, AbbVie's revenue grew by 10.2% year over year to about $17 billion. Sales from Skyrizi and Rinvoq grew much faster than that, lifting the company's average. Neither medicine will lose patent exclusivity until the next decade, so they still have plenty of growth fuel left. And it's also worth noting that AbbVie has no remaining significant patent cliff through the end of the current decade.
Second, AbbVie has a deep pipeline with several products that could become blockbusters. One of them is ABBV-295, an investigational long-acting weight-loss candidate. ABBV-295 is an interesting product that could carve out a niche in the fast-growing anti-obesity market, as it could be administered monthly and address the need for weight-loss options with fewer adverse events. ABBV-295 is still in early-stage studies. There is a long road ahead before it can hope to earn approval.
But ABBV-295 is only the tip of the iceberg when it comes to AbbVie's pipeline. Consider the company's recent acquisition of Apogee Therapeutics for $10.9 billion in cash. Apogee brings a highly promising phase 3 asset, zumilokibart, under development for atopic dermatitis. Zumilokibart could have the advantage of being administered less frequently than current medicines in this area while sacrificing little in efficacy. AbbVie still has to demonstrate that in phase 3 studies, but this is a candidate that could help solidify its position in the immunology market.
Third, AbbVie is a fantastic dividend stock. When including the time it spent as a division of Abbott Laboratories (NYSE:ABT), the company is a Dividend King, or a corporation with 50 -- or more -- consecutive years of payout increases. Reinvesting dividends can significantly boost long-term returns, particularly with a stock that consistently grows its payouts like AbbVie does. That's another reason the company may outperform broader equities, and is worth investing in today for long-term, income-seeking investors.
2. Costco
Costco has faced a fairly volatile environment this year. Soaring gas prices and other macro headwinds have weighed on the company's business. Meanwhile, the stock remains fairly expensive. Costco is trading at 40.8x forward earnings, versus an average of 21.6x for consumer staples stocks. Investors are willing to pay a premium for Costco, so long as the business remains healthy.
But like always, expensive stocks can decline meaningfully at any sign of trouble, and that's what has happened to the retail giant. Costco's shares are down 4% over the past year, while the S&P 500 has gained 19%. That said, Costco's financial resuls has proved fairly resilient despite the headwinds it is facing.
In the third quarter of the company's fiscal year 2026 (its period that ended on May 10), Costco's revenue grew by 11.6% year over year to $70.5 billion. Comparable sales rose 9.8%, while the company's earnings per share were $4.93, up 15% versus the comparable period of the previous fiscal year. Costco may remain somewhat volatile in the short run as it navigates an uncertain environment, but there is a lot to like about the company's long-term prospects.
Costco's subscription business model provides a high-margin, recurring revenue stream and a powerful incentive for customers to keep shopping in its stores to get their money's worth from their subscriptions. That alone grants the company a solid competitive advantage. It also has a strong e-commerce business that should help lift profits and margins over the long run. Then there is the dividend. Costco has raised its payouts for 22 consecutive years.
That's not close to Dividend King status, but it's still impressive. Despite Costco's low 0.6% forward yield, the company is a solid income stock to hold onto for a while. I'd follow Israel Englander's lead on this one.
Should you buy stock in AbbVie right now?
Before you buy stock in AbbVie, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AbbVie wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, and Costco Wholesale. The Motley Fool has a disclosure policy.

Billionaire Israel Englander Is Doubling Down on These 2 Outstanding Dividend Stocks. Should You?

Key Points
Warren Buffett guided the Berkshire Hathaway holding company to market-beating returns for 60 years.
He regularly said that everyday investors could do well by purchasing an exchange-traded fund that tracks a diversified index like the S&P 500.
In February 2014, Buffett specifically recommended the Vanguard S&P 500 ETF for its low fees and its ability to help young investors secure their financial future.
Warren Buffett is one of the world's most iconic investors. He served as CEO of the Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) holding company from 1965 to 2025, turning it into a $1 trillion conglomerate with numerous subsidiaries, a stock portfolio worth over $350 billion, and another $365 billion in cash.
Berkshire stock returned 19.7% annually during Buffett's 60-year tenure, so an investment of $500 in 1965 would have grown to a whopping $24 million by the end of 2025. But he was a seasoned professional, so he always knew the average investor would struggle to replicate his performance. That's why he consistently advocated exchange-traded funds (ETFs) that track a diversified index, like the S&P 500.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
The Vanguard S&P 500 ETF (NYSEMKT: VOO) is one that Buffett specifically recommended in 2014 for its ultra-low fees. Here's how it could help young investors in their 20s build a financially secure future.
America's best stocks from 11 economic sectors
The S&P 500 is the most widely followed U.S. stock market index for a couple of reasons. First, it's made up of 500 companies from 11 different sectors of the economy, so it's highly diversified. Second, it has very strict entry criteria: its members must maintain a market capitalization of at least $22.7 billion and be profitable. But even after those boxes are ticked, a special committee ultimately decides which companies make the cut.
The S&P is weighted by market capitalization, so the largest companies in the index have a much higher representation than the smallest. Therefore, despite its diversified composition, the information technology sector has a massive weighting of 36.6% because it's home to five companies worth $1 trillion or more (Nvidia, Apple, Microsoft, Broadcom, and Micron Technology).
Below are the 11 sectors that make up the Vanguard S&P 500 ETF, along with their weightings and the three largest companies in each.
S&P 500 Sector
Sector Weighting
Largest Companies
Information technology
36.6%
Nvidia, Apple, Microsoft
Financials
12.5%
Berkshire Hathaway, JPMorgan Chase, Visa
Communication services
9.9%
Alphabet, Meta Platforms, Netflix
Consumer discretionary
9.4%
Amazon, Tesla, Home Depot
Healthcare
9.1%
Eli Lilly, Johnson & Johnson, AbbVie
Industrials
8.7%
Caterpillar, GE Aerospace, RTX Corporation
Consumer staples
4.7%
Walmart, Costco, Coca-Cola
Energy
3.4%
ExxonMobil, Chevron, ConocoPhillips
Utilities
2.1%
NextEra Energy, Constellation Energy, Southern Co
Real estate
1.9%
Welltower, Prologis, Equinix
Materials
1.8%
Linde, Newmont, Freeport-McMoRan
Data source: Vanguard. Sector weightings are accurate as of July 31, 2026, and are subject to change.
The technology sector is exerting a particularly strong influence on the performance of the S&P 500 right now, thanks to the artificial intelligence (AI) revolution, which began to gain momentum when OpenAI's ChatGPT application surpassed 100 million users in early 2023. In fact, if we exclude the sector's contribution over the last three-and-a-half years, the S&P 500's return drops from 101% to just 63%.
Simply put, the Vanguard ETF gives investors exposure to the fastest-growing area of the market in a diversified manner, which is why it's a popular long-term investment option.
Taking Buffett's advice could yield spectacular results
The S&P 500 has returned 10.7% since its inception in 1957 (assuming all dividends were reinvested). But it has delivered an accelerated return of 13.9% since Buffett recommended the Vanguard S&P 500 ETF in 2014, primarily thanks to the tech sector.
Past performance isn't always a reliable indicator of future results, but a 25-year-old investor could build a very nice retirement fund using the Vanguard ETF if its historical returns persist. Below are two potential outcomes.
Starting Balance at Age 25
Compound Annual Return
Balance at Age 65
$20,000
10.7%
$1,166,634
$20,000
13.9%
$3,647,362
Those results don't include costs, but with an expense ratio of just 0.03%, investors would incur an annual fee of just $3 for every $10,000 they have parked in the Vanguard ETF.
To conclude, investors probably shouldn't sell their entire position at retirement age, because compounding yields the greatest benefits over time. With a large enough balance after 40 years, the subsequent annual returns could provide a significant income to fund life after employment.
Should you buy stock in Vanguard S&P 500 ETF right now?
Before you buy stock in Vanguard S&P 500 ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of September 8, 2026.
JPMorgan Chase is an advertising partner of Motley Fool Money. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Alphabet, Amazon, Apple, Berkshire Hathaway, Broadcom, Caterpillar, Chevron, Constellation Energy, Costco Wholesale, Eli Lilly, Equinix, GE Aerospace, Home Depot, JPMorgan Chase, Meta Platforms, Micron Technology, Microsoft, Netflix, NextEra Energy, Nvidia, Prologis, RTX, Tesla, Vanguard S&P 500 ETF, Visa, and Walmart. The Motley Fool recommends ConocoPhillips, Johnson & Johnson, and Linde. The Motley Fool has a disclosure policy.

If I Were in My 20s, I'd Buy This Vanguard ETF Warren Buffett Recommended and Hold It Forever

Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in GFL Environmental Inc (Symbol: GFL), where a total volume of 39,322 contracts has been traded thus far today, a contract volume which is representative of approximately 3.9 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 211.1% of GFL's average daily trading volume over the past month, of 1.9 million shares. Particularly high volume was seen for the $45 strike call option expiring December 18, 2026, with 18,270 contracts trading so far today, representing approximately 1.8 million underlying shares of GFL. Below is a chart showing GFL's trailing twelve month trading history, with the $45 strike highlighted in orange:
Costco Wholesale Corp (Symbol: COST) saw options trading volume of 36,492 contracts, representing approximately 3.6 million underlying shares or approximately 206.1% of COST's average daily trading volume over the past month, of 1.8 million shares. Especially high volume was seen for the $950 strike call option expiring September 18, 2026, with 923 contracts trading so far today, representing approximately 92,300 underlying shares of COST. Below is a chart showing COST's trailing twelve month trading history, with the $950 strike highlighted in orange:
And Park Aerospace Corp (Symbol: PKE) saw options trading volume of 4,421 contracts, representing approximately 442,100 underlying shares or approximately 204% of PKE's average daily trading volume over the past month, of 216,760 shares. Particularly high volume was seen for the $35 strike call option expiring September 18, 2026, with 4,385 contracts trading so far today, representing approximately 438,500 underlying shares of PKE. Below is a chart showing PKE's trailing twelve month trading history, with the $35 strike highlighted in orange:
For the various different available expirations for GFL options, COST options, or PKE options, visit StockOptionsChannel.com.
Further GFL Research:

Notable Tuesday Option Activity: GFL, COST, PKE

Key Points
While Amazon's price-to-earnings ratio has fallen steeply since 2024, the ratios of Costco and Walmart have moved higher.
The reasoning behind these moves makes sense, too.
Amazon's valuation decline and its retail rivals' rises have arguably gone too far.
Never let it be said the stock market doesn't keep things interesting.
The latest installment of the market's "huh?" series of developments concerns the current valuation levels of technology giant Amazon (NASDAQ: AMZN) compared to its brick-and-mortar retailing rivals Walmart (NASDAQ: WMT) and Costco (NASDAQ: COST).
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Walmart stock is currently trading at 37 times this year's expected earnings, while Costco shares are priced at more than 44 times their projected earnings.
Amazon stock, conversely, is valued at only a little over 20 times analysts' estimates of this year's earnings -- roughly half the earnings multiple that the market is willing to pay for its (much) slower-growing peers.
What gives?
All of it is defensive-minded
You never truly know how a crowd comes to a collective decision. But you can come to some reasonable conclusions based on the commonly repeated themes in the news coverage and chatter about a particular company.
In this instance, Amazon's price-to-earnings ratio has been pared back heavily from its long-standing level of above 50 almost entirely because of the amount of money the company is spending on artificial intelligence infrastructure.
That's not an unreasonable thing for investors to be concerned about, either. As of the latest update, Amazon now says it's budgeting for capital expenditures of $220 billion this year, the bulk of which will go toward technology meant to support its cloud computing unit's artificial intelligence offerings. For perspective on that figure, analysts expect Amazon to turn $828 billion in revenue into $134 billion in net earnings in its fiscal 2026, although its cloud business (as opposed to its e-commerce arm) is only on pace to report roughly $60 billion in operating income on sales of $160 billion.
In other words, it is making a sizable investment in artificial intelligence compute capabilities that haven't exactly cemented their marketable usefulness into place yet. Investors are just being cautious by not paying a premium for shares of a company that could end up delivering disappointing news.
This concern is also at the heart of the reason Costco and Walmart shares have fought their way to unusually high valuations, by the way. Because many investors fear that an implosion of the artificial intelligence industry could create a ripple effect that upends the overall economy, they are gravitating toward businesses built to stay steady amid such a headwind. They're even paying premiums for stakes in such defensive companies.
No need to participate in the guessing game
The underlying logic is sound. It may not be necessary strategizing, though, particularly to the degree it's being done. At least most of the investments Amazon is making in artificial intelligence this year should produce some measure of return on investment sooner or later. And, while Costco and Walmart will be resilient no matter what macroeconomic conditions prevail, both stocks have reached valuations that far exceed their arguable worth as defensive holdings. Given their current price/earnings multiples, if the stock market as a whole runs into a serious headwind, there's certainly no guarantee that Walmart and Costco won't participate in any correction.
The smart-money move for the time being, therefore, may simply be to steer clear of all three of these names and instead look for stocks with performances that are a little less tethered to the concerns that the artificial intelligence frenzy is going to come to a screeching halt.
Don’t miss this second chance at a potentially lucrative opportunity
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On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $598,219!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $61,037!*
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Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.

Why Does Amazon Trade at a Discount to Walmart and Costco? Here's the Only Answer That Makes Sense.

Key Points
Costco’s sales remained strong in its fiscal 2026.
Its digital sales momentum stayed healthy late in the year.
The stock's premium valuation, however, leaves the business with little margin for error.
Costco Wholesale's (NASDAQ: COST) final sales update of its fiscal 2026 (which ended Aug. 30) shone a spotlight on a growth engine that is expanding much faster than the overall business. The company's digitally enabled comparable sales (sales initiated through a digital device and fulfilled through a warehouse or distribution center, as well as Costco Travel) rose by 20.9% year over year, more than twice the company's 8.4% total comparable-sales growth.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Digitally enabled sales surpassed $27 billion and accounted for nearly 10% of Costco's total net sales in its fiscal 2025. Hence, the business has become large enough to influence companywide growth.
Strengthening Costco's membership model
Costco is not trying to replace its warehouses with a digital business. Instead, digital tools are giving members more ways to discover its products and shop for them.
The company's personalization efforts could make these digital interactions more valuable. In the third quarter of its fiscal 2026, personalized recommendation carousels on its online platforms converted at roughly three times Costco's typical digital rate and generated just under $500 million of e-commerce sales.
However, rapid digital growth does not automatically translate into equally strong profit growth. Costco says its digitally enabled business carries a lower gross margin than its warehouse operations. Hence, the value of the opportunity depends on whether higher engagement and improved convenience can offset the impact of that lower-margin mix.
September 2026 will be crucial
The company's digital momentum remained strong late in the fiscal year. Digitally enabled comparable sales rose 19.5% year-over-year in fiscal 2026 Q4 and 17.9% year-over-year in August 2026. However, both were lower than the digital growth rate for the fiscal year as a whole.
The stock's valuation could also prove challenging for investors. Costco is currently trading at roughly 40.8 times Wall Street's fiscal 2027 consensus earnings estimate of $22.7 per share (as of Sep. 3, 2026). Its digital growth alone cannot justify such a premium valuation.
Costco is scheduled to report its fiscal fourth-quarter earnings results on Sept. 24. The more important question that report may answer is whether rapid digital growth is also strengthening member economics and overall profitability. If Costco can keep growing the digital business at the 15% to 20% pace it has been achieving recently while preserving those metrics, it could become a meaningful growth driver in the coming years.
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1 Stat That Makes Costco Hard to Ignore this September

Walmart Inc. WMT is increasingly building advertising into the economics of its digital business, adding a faster-growing revenue stream alongside e-commerce operations. The business is gaining scale across U.S. and international platforms while contributing to a more favorable mix of higher-margin commerce solutions.
In second-quarter fiscal 2027, Walmart’s global advertising business grew 38% year over year. Walmart U.S. advertising, including VIZIO, also increased 38%, led by a 43% rise in Walmart Connect. International advertising advanced 20%, driven by Flipkart Ads. The gains came as global e-commerce sales increased 23%, including 24% growth at Walmart U.S. and 19% internationally.
The profit contribution is becoming more relevant as digital businesses scale. Walmart’s gross profit rate expanded 96 basis points to 25.4%, with the improvement also reflecting a favorable business mix led by global advertising. Adjusted operating income increased 17.4% in constant currency, supported in part by improved incremental margins in digital and strength in high-margin commerce solutions, although tariff refunds were a significant benefit.
Walmart is widening its advertising opportunity through the acquisition of Vibe. The deal expands access to small and medium-sized advertisers through self-service tools and adds measurement capabilities tied to shopping behavior. However, acquisition and integration costs related to Vibe are expected to create an approximately 20-basis-point headwind to fiscal 2027 operating income growth.
Advertising’s growth is helping improve Walmart’s business mix. Its expansion adds a higher-margin commerce solution to the profit mix, although Vibe-related costs will weigh on fiscal 2027 operating income growth.
What Do the Latest Metrics Say About Walmart?
Walmart, which competes with Costco Wholesale Corporation COST and Target Corporation TGT, has seen its shares gain 4.8% over the past year compared with the industry’s 3.5% growth. Shares of Costco have dipped 5.8%, while Target has surged 79.7% in the aforementioned period.
From a valuation standpoint, Walmart's forward 12-month price-to-earnings ratio stands at 34.75, higher than the industry’s 31.79. The company is trading at a premium to Target (with a forward 12-month P/E ratio of 16.8) while trading at a discount to Costco (44.77).
The Zacks Consensus Estimate for Walmart’s current fiscal-year sales and earnings per share implies year-over-year growth of 5.3% and 8.7%, respectively.
Walmart currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Walmart's Ad Business Expands: Can High-Margin Growth Lift Profits?

Target Corporation’s TGT second-quarter fiscal 2026 results highlighted a pivotal shift in its revenue mix, driven by rapid expansion in non-merchandise revenues. Total net sales grew 5.3% year over year to $26,539 million, reflecting a 5% gain in merchandise sales and a 20.1% surge in non-merchandise sales. This increase underscores the growing momentum and operational scaling of Target’s alternative, higher-margin business initiatives.
The growth in non-merchandise sales was driven by continued expansion across Roundel advertising, Target Circle 360 membership revenues and the Target+ marketplace, showing that revenue streams beyond traditional product sales are becoming more meaningful within the business.
The underlying momentum was broad. Management said Roundel gross billings rose nearly 20% from a year ago, while Target+ marketplace gross merchandise value increased more than 40%. Target Circle 360 membership revenues also climbed more than 40%. These businesses extend Target’s relationship with guests and brands beyond merchandise transactions, adding advertising, marketplace and membership income to the company’s sales base.
Advertising revenues of $279 million in the quarter jumped from $217 million a year earlier. Other revenues increased to $174 million from $141 million, while credit card profit sharing edged up to $139 million from $134 million. Together, these components helped non-merchandise sales grow, well ahead of merchandise sales.
By leveraging its digital footprint, brand affinity and store traffic, Target is effectively monetizing guest engagement beyond traditional retail transactions. The surge in non-merchandise sales demonstrates that these strategic platforms are rapidly scaling, generating high-margin revenues and playing an essential role in diversifying Target’s overall business model as digital commerce and retail media continue to evolve.
How Does Target Stack Up Against Its Industry?
Target, which competes with Dollar General Corporation DG and Costco Wholesale Corporation COST, has seen its shares rally 32.7% over the past three months against the industry’s 3.6% decline. While shares of Dollar General have risen 24.7%, those of Costco have fallen 6% in the aforementioned period.
What Does Target’s Current Valuation Suggest?
From a valuation standpoint, Target's forward 12-month price-to-earnings ratio stands at 15.77, lower than the industry’s 29.13. However, the stock is trading above its 12-month median level of 14.89.
Target is trading at a discount to Costco (forward 12-month P/E of 40.71) and Dollar General (17.53).
What Do Earnings Estimates Signal for Target?
The Zacks Consensus Estimate for Target’s earnings per share for the current and next fiscal year has increased by 16 cents and 9 cents to $10.43 and $9.36, respectively, over the past seven days.
Target currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Target's Non-Merchandise Sales Jump 20% as New Revenue Streams Scale

Costco Wholesale Corporation COST closed fiscal 2026 on a strong sales note, with fourth-quarter net sales rising 11.3% year over year to $93.9 billion from $84.4 billion. The increase highlights solid sales momentum over the 16-week quarter, while the company’s digitally enabled business remained a notable contributor to the overall pace of growth.
Comparable sales for the fourth quarter increased 9.4% companywide. The United States posted a 10.7% comparable-sales gain, while Canada and Other International rose 5% and 7%, respectively. Against that backdrop, digitally enabled comparable sales climbed a much faster 19.5%, showing that Costco’s online and digitally supported channels continued to expand at a stronger rate.
The digital trend remained similarly strong after excluding the effects of gasoline-price changes and foreign exchange. On that basis, total company comparable sales advanced 6.7% in the quarter, while digitally enabled comparable sales increased 19.8%. This wide gap underscores the strength of digital activity during the period.
The momentum was also visible in August, when digitally enabled comparable sales rose 17.9%. For the full 52-week fiscal year, the metric increased 20.9%, or 20.7% excluding gasoline and foreign-exchange impacts.
Costco’s fourth-quarter sales performance was marked by double-digit net sales growth and a digitally enabled business that continued to grow materially faster than companywide comparable sales throughout the reported period.
How Costco Compares With Target and BJ’s Wholesale
Target Corporation TGT also showed improving sales and digital momentum in second-quarter fiscal 2026. Target’s net sales rose 5.3% year over year to $ 26,539 million, while comparable sales increased 3.8%. Digital comparable sales advanced 8.7%, outpacing comparable store sales growth of 2.7%, with same-day delivery rising more than 25%. For Target, the results highlight how digital channels continued to supplement broader top-line growth during the quarter.
BJ's Wholesale Club Holdings, Inc. BJ posted stronger digital growth in second-quarter fiscal 2026, alongside a sharp increase in overall sales. BJ’s Wholesale net sales climbed 15.9% year over year to $6,091 million, while comparable club sales, excluding gasoline, rose 3.1%. Digitally enabled comparable sales surged 30%, representing 64% growth on a two-year stacked basis. For BJ’s Wholesale, digital convenience remained a key driver, supported by pickup, same-day delivery and ExpressPay engagement.
What the Latest Metrics Say About Costco
Costco has seen its shares tumble 6% over the past three months compared with the industry’s decline of 3.6%.
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 40.71, higher than the industry’s ratio of 29.13. However, it is trading below its 12-month median level of 47.12, indicating some moderation in valuation.
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 9.6% and 13.5%, respectively. For the next fiscal year, the consensus estimate indicates a 7.9% rise in sales and 10.2% growth in earnings.
Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).

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