A couple weeks back, before the market shut down in memory of former President Jimmy Carter, a report from Fox Business advanced a strange idea. Walmart (WMT) was poised to outperform Amazon (AMZN) in 2025. And that idea stuck in my head like a popcorn kernel in my molars—and believe me, I hate it when that happens—so I went rapidly chasing down that rabbit hole to see if I could not see the thread for myself.
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The Case For
On a certain level, the assertion that Walmart would outperform Amazon does make some sense. After all, we are still in the declining days of the Biden Administration, though most of 2025 will belong to Trump. However, we also know that Trump’s mere presence in the White House will only go so far to impact peoples’ buying decisions for quite a while, so we can therefore assume a large portion of 2025 will look a lot like 2024. That means ongoing inflation nightmares for all, and a dozen eggs still going for at least four bucks.
However, a report from Georgia Tech’s Ivan Allen College of Liberal Arts suggests that a lot of what impacts the economy in a presidential election is emotion. People “feel” better about a certain president in the White House, thus, they spend accordingly. This makes a certain sense; the “wealth effect” dictates that, as assets rise, people feel more confident, and thus are more willing to spend. Those who do not feel that confidence do not spend. So, if the American people look for happy days under Trump, they may be more inclined to spend.
This will not help Walmart. But the confidence boost from a Trump presidency will take a while to kick in properly, and that means Walmart should continue to gain from an economy where people are skittish and downsizing to shop at Walmart, and eschew Amazon.
The Case Against
One thing that some might forget about Amazon is that it is no longer just a retailer. Amazon is a retailer, yes, and one par excellence. Amazon is huge. It sells virtually everything, and from an interface so simple and intuitive that you can shop while on the toilet. But again, confidence factors in here. As people grow more confident in the economy, they are more likely to come back to Amazon away from Walmart, and shop therein.
Beyond shopping, however, Amazon has a range of other businesses. It can match Walmart for groceries thanks to not only Whole Foods but also for Amazon Fresh. Amazon has been pushing the smaller-footprint stores, which gives it better access to the urban market. And, Amazon has its own streaming service. Even Walmart’s purchase of Vizio does not give it access to such a thing. Yet. Amazon also has its cloud-based operations, which allows it to compete against the likes of Microsoft.
Tale of the Tape
Finally, we take a look at the two companies side by side, using the last data available to us, from after-hours trading on Friday. And we see here that both are rated Strong Buys. However, AMZN stock has the stronger upside potential, and a share price that is nearly twice that of WMT stock. AMZN’s average price target is $251.35 with an 11.25% upside potential, while WMT comes in at an average price target of $99.56 with an 8.29% upside potential.
