Costco

COST

Market cap $449B

Amazon's high-margin cloud computing revenue accelerated to 24% year-over-year growth in Q4. Costco boasted a 92% membership renewal rate in the U.S. and Canada despite raising its annual fee.

Costco remains a core holding, benefiting from economic stress as consumers seek value and shift toward its low-margin, high-quality offerings. Membership growth has accelerated alongside inflation, with Kirkland Signature driving customer loyalty and market share gains during the ongoing 'vibecession.' Q2 earnings expectations are high, with consensus revenue at $69B and EPS around $4.50; surprises in membership or digital sales could move the stock.

Costco Wholesale Corp (NASDAQ: COST) shares climbed on Friday as investors weighed its positioning in a K-shaped economy.

COST heads into Q2 earnings with revenues seen up 8.6% and EPS up 12.7%, but its premium valuation could temper upside for new buyers.

Costco is still expanding, but its renewal rates are slipping. Its stock also looks expensive relative to its growth potential.

Better pricing, effective inventory management and operational initiatives are likely to drive Retail-Discount Stores companies. COST, ROST, TGT and DG look well placed.

I am upgrading Costco to 'buy' as defensive rotation and predictable earnings drive outperformance versus the S&P 500 and growth/AI companies like Amazon. COST's international expansion, accelerating digital sales, and robust membership fee growth underpin steady revenue and operating leverage. Membership fees, especially from Executive members, now contribute over 53% of operating income, shielding profits from macro volatility.

Costco, Five Below, and Wayfair have bullish momentum on their side. Costco shares are up 16% in 2026, easily beating the market.

Costco continues to offer good prices, enticing more people to sign up for its memberships. Walmart's record-high e-commerce penetration is helping its profits grow faster than sales.

In the most recent trading session, Costco (COST) closed at $998.12, indicating a +1.23% shift from the previous trading day.