Buy This, Not That: The Retail Stock With 34% Cloud Margins

Shah Gilani|December 3, 2025

One retail giant is hitting new highs almost daily. The chart looks perfect.

The other? It’s chopping around, looking messy.

So which one should you buy?

Here’s what most investors miss – the first company’s profit margins sit at just 3% to 3.5%. The second company’s overall margins are 11%. But dig deeper and you’ll find its cloud business is pulling 34% margins.

That’s not just better. It’s in a different universe.

And while the first is growing steadily at 10% to 20% annually in value retail and groceries, the second has something the first can’t match – a direct line to AI monetization across its selling platforms, advertising, and especially its cloud division.

In today’s Buy This, Not That, I break down why the choppy chart is actually your opportunity and why one company’s long-term growth is going to dwarf anything the other can deliver.

Click on the thumbnail to dive in.

Transcript

Hey, everybody. Shah Gilani here with your weekly BTNT, as in Buy This, Not That. Now I want to pin Walmart, the largest retailer on the planet, incredibly profitable, just a wonderful business. The stock may go through the roof against Amazon, the e-commerce giant and breaker of a lot of small businesses.

So I’m going to start off with Walmart. Now why these two? Because even though there aren’t a lot of similarities, they’re both the biggest in their field – biggest e-commerce business as far as retail sales goes, and also, FYI, the biggest cloud operator as far as Amazon goes and the largest retailer on the planet for Walmart. So let’s just take a look at the charts. First off, I’m going to go over some stats while we take a look at Walmart, which has just been an absolute stellar performer, making new highs lately.

We’ve made a ton of money on Walmart in one of my services, buying call options and buying call spreads on this. And Walmart has been serving us very well. So I think it’s going to serve you very well. I love the stock. Love it. And it’s a question of it versus Amazon. But on its own, there’s not a lot to dislike about Walmart. So a couple of things about Walmart.

One of the things I’m not that keen on, of course, is their profit margin. Trailing 12-month profit margin is around 3% to 3.5% versus Amazon’s 11.1%. Still, Amazon stock has not performed lately the way Walmart has. But Amazon’s 11% profit margin doesn’t speak to the mid-30s profit margin on their cloud business.

So yeah, that’s a blended figure. If you take the 3% or maybe even less for everything else that Amazon sells and does versus the cloud at about 34% last quarter, those profit margins blend down to 11%. So still a heck of a lot better than Walmart’s 3% to 3.5%. Now we know what Walmart does.

Physical retail is growing. It’s growing its online business huge. And it’s growing its grocery business hugely also. So they also make money off of some ads and off some media. Amazon, of course, is the king of that when it comes to e-commerce – high margin ad business, high margin retail subscription ecosystem, where Walmart doesn’t have that kind of ecosystem.

So growth prospects – I’m going to tell you that Walmart, as far as value retail goes, grocery, consumables, it’s really probably the favorable place to be. And again, their online and delivery is really super and it’s got really good margins on that. So they’re certainly doing a pretty good job with that, growing at about 10% to 20% annually. So tremendous there. The other side of it is as far as Walmart goes, I think it’s got a higher valuation versus its margin. So that makes it pretty, I think, important and steady. It’s a value retail stable cash flow business. And frankly, it’s hard not to like it. But when you compare it to Amazon, if you take a look at Amazon’s chart, it doesn’t look as cool as Walmart’s does. It looks like, oh boy, it’s chopping around.

And part of the problem with Amazon is, yeah, they’re in the business of now going up against a lot of other folks in terms of chips because yes, Amazon has their own chips, people. And as far as AI, yes, Amazon is building its AI. As far as cloud, yes, it’s got Azure – Microsoft Azure – coming up behind it. And a lot of other cloud developers are trying to compete with the likes of AWS. But Amazon’s AWS is still the largest, period.

Now, a couple of the things that I like better about Amazon, besides its high cloud, high margin, overall operating margins being much higher than Walmart, is you have the potential for this growth area in AI that you’re not going to see translate as much at Walmart. Of course, Walmart’s going to be incorporating AI facilities any way they can, every way they can, as everybody’s going to. But Amazon’s got a straighter line to profitability, to have monetization result from its AI implementation across its selling platforms, across its advertising platforms, and certainly across the cloud, which is probably the most important.

As far as Amazon, it’s just hugely different than Walmart in terms of the metrics. What I look at in terms of the growth prospects – we’ve got slow and steady and really good as far as Walmart, but you’ve got a little bit choppy in terms of Amazon. But the longer-term, over-the-long-haul growth for Amazon is going to dwarf, I believe, anything that Walmart can do. So when it comes to Amazon versus Walmart, I like Walmart. But if I’m going to buy one here, it’s going to be Amazon, especially the fact that it’s got a little bit of room to move down here, having slipped a little bit before it gets back to its highs as opposed to Walmart already knocking on new highs daily.

So between Amazon and Walmart long term, buy Amazon, not Walmart. Catch you guys. Behave out there. Cheers, everybody.