For the first time, Amazon has dethroned Walmart as the company with the largest annual revenue.

Walmart on Thursday reported annual revenue of $713.2 billion for its most recent fiscal year, shy of Amazon’s $716.9 billion in revenue. The milestone was brewing for months, as Amazon leapfrogged Walmart in quarterly sales for the first time about a year ago.

The shuffle, while largely symbolic, underscores the battle the two retailers have waged both to define and keep up with ever-changing consumer preferences. They are kicking off a new chapter of that rivalry as artificial intelligence reshapes how companies operate, make money and drive sales.

Amazon rose to the top of the revenue pile by doing much more than running a sprawling online webstore and promising speedy delivery. While its core retail unit is its largest revenue generator, its huge cloud computing, advertising and seller services businesses also fuel its sales. Third-party seller services, which include commissions and fees collected by Amazon fulfillment along with shipping, advertising and customer support, accounted for about 24% of the company’s total sales in 2025, according to its latest annual filing. Amazon Web Services was responsible for roughly 18%.

It wasn’t Walmart’s weakness that led it to lose its top spot, as its revenue has more than doubled in 20 years. The retailer has leaned on its more than 4,600 Walmart stores and roughly 600 Sam’s Club locations in the U.S. to power its digital business, which grew by 27% in the U.S. in the fiscal fourth quarter and has posted double-digit percentage gains for 15 straight quarters.

That expansion came as Walmart riffed off the Amazon playbook and tried to position itself as a tech company as well as a retailer.

There have been multiple signs of its ambitions: Walmart relisted its stock, moving from the New York Stock Exchange to the tech-heavy Nasdaq in early December. Its market value surpassed the $1 trillion mark earlier this month, a valuation achieved almost exclusively by tech companies including Amazon, after a more than 21% rise in the last year.

And the big-box retailer’s fourth-quarter earnings, which were boosted by digital advertising and its third-party marketplace, illustrated Walmart’s emphasis on chasing higher-margin businesses and thinking beyond brick-and-mortar retail.

Walmart struck a deal with OpenAI’s ChatGPT in October and Google’s Gemini in January to make its products easier to discover and buy. It also has its own AI-powered shopping assistant, Sparky. The virtual assistant, which looks like a smiley face, pops up on Walmart’s app and can help shoppers find items.

Walmart, like many other companies, is in the early days of AI adoption, and it’s unclear how the technology will affect its business long-term.

On the company’s earnings call on Thursday, Walmart CEO John Furner said customers are spending more when they use Sparky. He said customers who use Sparky have an average order value that’s about 35% higher than shoppers who don’t use the tool.

About half of Walmart’s app users have used Sparky, Walmart U.S. CEO David Guggina said on the earnings call.

“Agentic AI is increasingly embedded across Walmart,” Guggina said. “It’s strengthening our operations. It’s improving associate productivity, and it’s enhancing the customer experience.”

Walmart CFO John David Rainey said AI investments are included in the retailer’s capital expenditure plans for the full year, which are expected to be roughly 3.5% of sales. Those expenses also include the company’s investments in automation and store remodels.

There are limits to Walmart’s tech ambitions. When it comes to AI, Rainey said Walmart will lean on the expertise of tech companies rather than try to create its own products.

“As you’ve seen from the announcements we’ve made, we’re approaching AI development through partnerships,” he said on the company’s earnings call. “This lets tech companies do what they do best, develop innovative technology, and it provides us clarity to do what we do best, to translate the best of tech to retail experiences that create value for our customers and members and our enterprise.”

Like Walmart, Amazon is also facing new pressure to respond to the rise of agentic commerce. Chatbot makers like OpenAI, Google and Perplexity have introduced automated commerce features that aim to change how people shop online.

While other companies like Walmart, Etsy and Shopify have announced shopping partnerships with AI platforms, Amazon has remained on the sidelines. It’s blocked agents from accessing its site, and doubled down on its own shopping chatbot, Rufus, which is powered by its own models and Anthropic’s chatbot Claude.

The company said Rufus has been used by more than 300 million customers and drove almost $12 billion in incremental annualized sales last year. After slowly rolling out the service in beta two years ago, Amazon has injected Rufus across more areas of its app and website to encourage shoppers to use the tool.

Amazon CEO Andy Jassy said last month that Rufus and other AI tools could assist shoppers with finding products much like an employee in a physical store.

“I think agents are going to help customers with that type of discovery,” Jassy said. “And it’s part of why we’ve invested so much in Rufus, which is our shopping assistant.”

Meanwhile, Amazon is throwing piles of cash at AI infrastructure. Earlier this month, it announced it would spend up to $200 billion this year on AI initiatives, more than any of the other hyperscalers, which have altogether forecast nearly $700 billion in 2026 expenditures. Most of Amazon’s spending is expected to go to data centers, chips and networking equipment.

Wall Street has viewed Amazon’s capex plans skeptically, sending the company’s shares down for nine days straight following its Feb. 5 earnings report and shaving more than $450 billion off of its market value.

Amazon’s investments aren’t limited to AI compute. The company has also put significant resources and talent behind developing AI tools across all of its businesses. It’s also rolled out a suite of AI models, and revamped its Alexa assistant. It also has invested $8 billion in Anthropic since 2023.

— CNBC’s Robert Hum contributed to this report