Is Costco on Track to Become a Trillion-Dollar Company?

Key Points

• It's arguably more a matter of when and not if Costco's market cap hits $1 trillion.

• Costco could join the trillion-dollar club sooner rather than later if it delivers stronger-than-expected growth.

• Stiff competition and a premium valuation are two key hurdles for Costco.

• 10 stocks we like better than Costco Wholesale ›

Signing up to shop at Costco Wholesale's (NASDAQ: COST) stores is a lot like joining a club. You pay the dues and receive the benefits of membership in return. The company's primary rivals even call themselves clubs -- Walmart's (NYSE: WMT) Sam's Club and BJ's Wholesale Club (NYSE: BJ).

But there's an exclusive club that Costco isn't in right now that investors would love for it to join. Only 10 companies listed on U.S. stock exchanges have market caps of at least $1 trillion, enough to make them members of the trillion-dollar club. Is Costco on track to become a $1 trillion company?

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Image source: Costco Wholesale.

An easy answer

There's an easy answer to that question. Yes, Costco is on track to become a $1 trillion company. It's arguably more a matter of when and not if it will happen.

Costco's market cap stood at $425 billion as of the market close on Aug. 26, 2025. The membership warehouse pioneer's valuation would need to increase by roughly 235% to reach $1 trillion. Is this growth feasible? Yep.

The stock has delivered a slightly greater return over the last seven years. Most of this gain came in the last five years, with Costco's share price soaring more than 170%.

Stock price appreciation tends to correlate with earnings growth over the long term. Costco's earnings per share jumped 13.2% year over year in the third quarter of fiscal 2025. If the company can continue to grow earnings at 13.2% per year and its share price moves higher at around the same rate, it could join the trillion-dollar club within the next seven years.

How Costco could hit $1 trillion sooner rather than later

Costco's market cap can reach $1 trillion sooner than seven years. Perhaps the easiest way for the company to boost revenue and earnings is to raise its membership fees. Costco last increased its membership fees in September 2024. The challenge with this option, though, is that higher fees could negatively affect renewal rates.

Another option is for Costco to accelerate its international expansion. The company expects to have 285 stores outside the U.S. by the end of its fiscal year 2025. However, this will make up less than one-third of its total stores.

Costco could also potentially move into new ancillary markets. A quick way to accomplish this would be to acquire one or more companies in high-margin industries.

I'd say a no-brainer for Costco would be to step up its e-commerce game. Although the company's e-commerce sales are already growing faster than brick-and-mortar store sales, Costco lags well behind Walmart in serving customers online.

Increasing operational efficiency through technology is another smart way for Costco to grow its bottom line. The company has some efforts underway along these lines, but it arguably hasn't been as adept at deploying technology as others in the consumer goods sector.

Costco's biggest hurdles

Costco has two primary hurdles to get to $1 trillion quickly. Neither is insurmountable, though, in my opinion.

First, Costco faces stiff competition that could increase the difficulty in delivering stronger growth. The good news on this front is that the company's sales are growing faster than Sam's Club's and BJ's Wholesale Club's.

Second, Costco's valuation might be problematic. The stock trades at a lofty forward price-to-earnings ratio of 46.5. Notably, though, high earnings multiples haven't kept Costco's share price from soaring in the past. Valuation won't necessarily be a significant issue going forward.

I fully expect that Costco will indeed reach a market cap of $1 trillion by early in the next decade if not sooner. However, I view several other current members of the trillion-dollar club as even better picks for long-term investors.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.