Retail giant Walmart (WMT -0.10%) has held the top spot in revenue generation among publicly traded companies for about 20 years now (it dethroned ExxonMobil in 2001). Through its discount sales business model and relentless growth in stores across the U.S. and around the world (roughly 10,500 globally), the company generated about $560 billion in annual sales in fiscal 2021.

E-commerce giant Amazon (AMZN -0.34%) climbed through the ranks of publicly traded companies to reach the unofficial No. 2 spot last year (China Petroleum & Chemical is technically No. 2, but it is majority-owned by the Chinese government). But even though Amazon's sales of $386 billion were well behind Walmart's total, Amazon is growing much faster and could eclipse Walmart's sales sooner than you might think.

Let's see how.

a crown sits atop a pile of money

Image source: Getty Images.

Dominating retail

Before it was the biggest overall company in the U.S. by revenue, Walmart was still the largest U.S. retailer. The Arkansas-based company operates globally under 48 brand names, including several e-commerce sites.

The pandemic economy ended up being a big boost for Walmart, and sales grew nearly 7% over the past year, much higher than its more typical low single-digit percentage growth. However, because the pandemic created such an outlier year, sales are actually expected to decline slightly in the current fiscal year or go back to low single-digit growth on an adjusted basis. In all likelihood, revenue will hold at around $560 billion for the fiscal year.

The company still sees growth opportunities long-term despite its unmatched girth. CEO Doug McMillon said: "There is so much opportunity still in front of us. ... This is a different business today, and we're just getting started."

Walmart has been in launch mode recently, particularly focused on its e-commerce initiative Walmart+, the company's new consumer subscription program to challenge Amazon Prime. But Walmart's digital sales only grew 37% in fiscal 2022's first quarter (ended April 30), which doesn't quite keep pace with Amazon's sales growth over the same time period.

Dominating digital

Amazon currently dominates digital sales and it is growing at a much faster clip overall. Fiscal 2020 sales grew 38%, and they are also inflated from a typical year because of the pandemic. But even in a standard year, Amazon's growth has been vibrant, coming in at 20% in 2019 and 31% in 2018.

Cashier checking customer out in a supermarket.

Image source: Getty Images.

The company is forecasting sales to increase between 24% and 30% in fiscal 2021's second quarter (Amazon usually beats guidance). This year, it's moving Prime Day up from its normal July event to June and into the second quarter. That might help it beat tough comps for the quarter, but growth could be slowing down from pandemic highs.

Management didn't provide full-year guidance, but we can model a few scenarios for low-end and high-end based on Q1 sales growth, Q2 guidance, and typical growth stats for the third and fourth quarters. We can also throw some general numbers into the future and see when Amazon could overtake Walmart as the largest U.S. company by revenue.

Amazon's 2021 revenue totals will still be influenced somewhat by pandemic shopping patterns, which will lift the total even if the second half of the year decelerates. A safe bet would be for 25% growth and an optimistic bet would suggest 30% growth. Based on those forecasts, year-over-year revenue growth would look like this:

Growth rate Amazon projected 2021 sales
25% $482.5 billion
30% $501.8 billion

If you take those two revenue totals and project them into 2022 at three different growth percentages:

$482.5 billion figure
projected into 2022
$501.8 billion figure
projected into 2022
20% $579 billion $602.2 billion
25% $603.1 billion $627.3 billion
30% $627.3 billion $652.3 billion

Source for both charts: Company financial filings. Calculations by the author.

In comparison, if Walmart's latest revenue total stays flat for the next year and grows 3% in fiscal 2023 (which effectively represents calendar 2022 sales), it would take in about $577 billion. That means even at the projected lows, Amazon should become the largest U.S. company by revenue by the end of 2022. If growth comes in lower, it might take a bit more time -- but it's coming soon.

Investor takeaway

The results presented in this little thought exercise don't necessarily mean you should sell any Walmart stock you own or even that you should definitely buy Amazon stock. Being No. 1 in revenue is more about bragging rights than anything else.

This report is more about providing a clear indicator of the dominant retail force that Amazon has become. As Amazon's dominance grows further, it has business implications for both companies and, because we are talking about such large companies, implications for the broader economy as well. Whether those implications are good or bad is better left for discussion in other stories.

The takeaway here is that investors considering a potential Amazon stock purchase should take note of the strong growth Amazon continues to generate even at such immense size and perhaps investigate the data further as it seems to suggest this stock would be a good addition to their portfolio.