Walmart (WMT 0.00%↑) is currently trading at a higher valuation multiple than Amazon (AMZN 0.00%↑).
This is genuinely one of the more striking valuation anomalies in large-cap equities right now.
As of mid-February 2026:
Walmart’s trailing P/E is around 52x.
Amazon’s trailing P/E is around 28x.
This premium for Walmart (especially on enterprise value multiples) stands out because Amazon is often viewed as a higher-growth, tech-driven company with massive exposure to high-margin businesses like AWS (cloud computing).
Key Reasons Walmart Trades at a Higher Multiple
Defensive flight-to-quality premium. In the current environment of tariff uncertainty, macro anxiety, and AI capex concerns, investors have been piling into Walmart. It’s the largest grocer in the U.S., selling necessities people buy regardless of economic conditions. Everyone needs to eat, and Walmart is the low-cost leader. It tends to deliver solid results in both good and bad economic times. Defensive quality commands a premium when investors are nervous.
The “new Walmart” narrative. The market is re-rating Walmart as more than a legacy retailer. Walmart’s e-commerce revenue has risen by 20% or more in seven straight quarters in the U.S. Its advertising business (Walmart Connect) is growing 30%+, and Walmart+ is attracting more affluent consumers. Investors are pricing in a platform transformation such as marketplace, ads and membership that could structurally improve margins over time. It’s being treated like a low-risk compounder with emerging high-margin revenue streams.
Amazon got punished for capex spending. Amazon recently announced massive AI and cloud infrastructure spending plans (reportedly $200B+), which spooked investors worried about near-term free cash flow. The market is essentially saying: “We’re not sure this capex cycle pays off.”
Is long AMZN / short WMT a good pairs trade?
The case for the trade is compelling on paper:
Walmart grew revenues less than 4% CAGR over the last decade yet trades at nearly 2x the earnings multiple of Amazon, which is growing revenue 12%+ and has AWS generating roughly 69% of operating profits with massive secular tailwinds.
Amazon’s forward P/E (28x) is actually below its 3-year and 5-year averages, while Walmart’s is 50% above its 10-year average. The relative value gap is historically extreme.
The valuation inversion is real and hard to justify on fundamentals. A business growing revenue at 4% with thin retail margins has no business trading at nearly double the multiple of a business growing 12%+ with a dominant cloud/AI/advertising platform. But this is a momentum and positioning trade as much as a fundamental one. If you’re going to express this, you’d want to be patient, size it modestly, and be prepared for the pair to widen before it converges. The asymmetry probably favors the long AMZN side more than the short WMT side as a standalone, given Amazon’s relative cheapness to its own history.
Timing is everything with mean-reversion pairs trades. You can be right on the fundamental thesis and still get squeezed for quarters. This is why we prefer options.
Our 2 Trades
We see two ways to express this, depending on your conviction level.