Costco Wholesale just made history. For the first time ever, its stock crossed the $1,000 mark, underscoring its resilience in a retail landscape where many others are struggling to keep pace. A decade ago, shares traded at a fraction of this — hovering around $100. Today, the surge reflects not just a stock on the rise, but a business with solid foundations and room to grow.
Behind this milestone is a simple truth: Costco’s business is firing on all cylinders. The fiscal first quarter of 2025, which ended on November 24, revealed net sales were up 7.5% year over year. While 7.5% may not sound like a blockbuster figure, it carries weight when you’re talking about a company pulling in over $250 billion in annual revenue. Even modest growth translates into billions.
The Membership Model: Costco’s Winning Formula
If you’ve shopped at Costco, you know the drill — membership isn’t optional. The annual fee, while seemingly small, is the backbone of the entire business. It allows the company to sell products at razor-thin margins, giving customers a sense of unbeatable value. In return, shoppers stay loyal. After all, no one wants to waste a membership they’ve already paid for.
The numbers back it up. Membership fees contribute less than 2% of Costco’s total revenue. Yet, they are crucial for keeping costs down, products affordable, and customers happy. This cycle of value and loyalty is Costco’s secret sauce.
What’s especially promising is Costco’s changing customer base. Around half of its new members in fiscal 2024 were younger than 40. That’s not just growth — it’s a signal that younger generations see Costco as relevant, valuable, and worth the annual price of admission. For a company thinking decades into the future, this demographic shift matters.
E-commerce Growth Could Be Costco’s Next Big Win
Costco’s digital footprint isn’t always the first thing that comes to mind when people talk about the retail giant. But it should be. In Q1 2025, the company’s e-commerce sales climbed 13% year over year, showing clear momentum.
Why does this matter? Look no further than Walmart for answers.
Over the past year, Walmart has turned its growing e-commerce presence into a goldmine of higher-margin revenue through retail media. This refers to ad space sold on digital platforms, powered by the retailer’s trove of customer data. In Walmart’s fiscal third quarter, global advertising revenue jumped 28% year over year.
As Walmart executives put it, the retail media business is not just growing — it’s building a “unique” platform that advertisers want in on. The math here is straightforward: thriving e-commerce enables retailers to monetize their digital real estate in ways that in-store shopping simply can’t.
What It Means for Costco
Costco is just starting to explore this avenue. CFO Gary Millerchip made it clear on the Q1 earnings call that retail media is “in the early innings” but represents a “significant growth opportunity.”
This matters because Costco, despite its massive size, operates on tight margins. Its trailing-12-month operating profit sits at $9.3 billion — a small figure compared to its overall sales. That’s why new revenue streams, like retail media, could pack an outsized punch.
The 13% e-commerce growth reported in Q1 isn’t just about selling products online. It’s a gateway to a future where Costco can generate high-margin revenue from digital ads — much like Walmart has successfully done.
Costco’s Stock Has More Room to Run
It’s no surprise that Costco shares have been climbing. But with the company’s e-commerce and retail media opportunities still in the early stages, there may be much more upside.
Costco’s stock has already delivered significant long-term returns, rising tenfold in the last decade. Yet, the next phase of growth could come from surprising places. As retail media continues to gain traction across the industry, Costco’s push into digital sales could unlock profits at a faster clip.
Here’s why investors should pay attention:
- Loyalty remains strong. Membership renewals and younger shoppers signal steady revenue for years to come.
- E-commerce momentum. Digital sales growth means more opportunities for retail media.
- Margin expansion. High-margin ad revenue could boost profits significantly.
For investors, the picture is clear. Costco is a retail giant with untapped potential. The membership model keeps customers coming back. Meanwhile, the company is quietly laying the groundwork for digital expansion. As e-commerce accelerates, the rewards could be bigger than anyone expects.
A Final Thought
There’s a tendency to think of Costco as “already there” — a mature, well-oiled machine that simply ticks along. But scratch beneath the surface, and there’s a dynamic business evolving to meet the future.
Retail media, e-commerce growth, and a younger customer base are signs of life that many aren’t yet pricing into the stock. The $1,000 share price isn’t the end of the story; it might just be the beginning of another chapter.
