✦ The Future BetsNarrow moat

Costco Wholesale (COST) — the future bets

No moonshot: thirty-five boxes a year, twelve countries with almost nothing in them, a late advertising business, and twenty billion dollars of idle cash.

Costco is the least speculative company in this collection, and its future bets are correspondingly modest. There is no moonshot here, no platform, no announced pivot. What there is instead is a set of levers the company has used before and can use again, each of which is arithmetic rather than invention.

Four levers, none of them a moonshotup to 35warehouse openingsplanned FY2026176warehouses outsideNorth America~$500Mestimated retailmedia revenue$19,996Mcash and short-terminvestmentsArithmetic rather than invention - which is the point.
Nothing here transforms Costco. The 46 times earnings is not paying for a new business; it is paying for this one to keep compounding at high single digits with a subscription attached.

One of them is concrete. Costco plans to spend $6,000 to $6,500 million of capital in fiscal 2026 and open up to 35 warehouses including five relocations, against $5,498 million and 27 openings including three relocations in fiscal 20251. Thirty net new boxes on a base of 914 is a little over 3% unit growth, and each mature warehouse does roughly $295 million of sales2 — so the pipeline itself is worth something like $9 billion of annual revenue once it seasons, before any comparable growth at all.

The next is geographic and much larger. At the third quarter of fiscal 2026 Costco operated 637 warehouses in the United States and 115 in Canada, and then a list that reads like a rounding error: 42 in Mexico, 37 in Japan, 29 in the United Kingdom, 20 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, three in France, two in Sweden, and one each in Iceland and New Zealand3. Other International produced $38,266 million of revenue at a 4.33% operating margin in fiscal 2025 — a better margin than the United States' 3.44%4.

A third lever is the one Costco has been slowest to pull. Retail advertising is the highest-margin revenue in modern retail and Costco's network, Costco Velocity, is small and late: an estimated $500 million or so against multi-billion-dollar businesses at Amazon and Walmart, with new placement formats built with Moloco going into beta in the second quarter of calendar 20265. The interesting question is not whether Costco can build one but how hard it is willing to push it at a membership that pays specifically not to be sold to.

The last is not a bet at all but a decision waiting to be made. Costco held $19,996 million of cash and short-term investments against $5,670 million of long-term debt at the third quarter of fiscal 20266, on a business that generates $13,335 million of operating cash flow a year and spends about half of it. It repurchased only 943,000 shares in fiscal 2025 — the share count actually rose7. The company's historical answer has been an occasional enormous special dividend: $15 a share in fiscal 2024, about $6,655 million paid out at once.

None of these will transform Costco, which is the point. The reason the shares trade at 46 times earnings is not that anybody expects a new business; it is that the existing one is expected to keep compounding at high single digits with a subscription attached. The bets on this page are what that compounding is made of.

Moat trajectory: Widening

Unit growth is accelerating from 27 openings to as many as 35, international margins are above domestic, and the advertising business has finally started. None of it transforms the company and all of it compounds.

The number that tests this moat
Reported
Capital expenditure planned for fiscal 2026
$6,000-6,500M, for up to 35 openings including five relocations

None of the bets on this page transforms Costco, which is the point. Thirty net new catchments is roughly $9 billion of eventual revenue, and the constraint is where a municipality will permit a 147,000 square foot box.

Source: Costco Form 10-K, fiscal year ended August 31, 2025 ↗
✦ Future bets — beyond today's moat
✦ FUTURE BET 01
Thirty-Five Warehouses a Year
Thirty new catchments is about $9 billion of eventual revenue, and the binding constraint is not capital but where a municipality will let you build.
✦ FUTURE BET 02
The Countries With Seven Warehouses
Seven in China, three in France, two in Sweden — and every one of those segments earns a better margin than the United States.
✦ FUTURE BET 03
Costco Velocity
The highest-margin revenue in retail, and the one Costco is most reluctant to take, because a member pays $65 not to be sold to.
✦ FUTURE BET 04
What Twenty Billion Dollars Is For
A buyback that does not shrink the share count and a history of enormous special dividends, from a company that has never made a large acquisition.
References
  1. ReportedCostco plans to spend $6,000 to $6,500 million of capital in fiscal 2026 and open up to 35 warehouses including five relocations, against $5,498 million and 27 openings including three relocations in fiscal 2025.
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 7 MD&A (net sales $269,912M, membership fees $5,323M, gross margin 11.12%, SG&A 9.25%, comparable-sales composition, capital expenditure, dividends and repurchases) — FY2025 · publ. October 8, 2025 · source ↗
  2. Moat Explorer calcThirty net new boxes on a base of 914 is a little over 3% unit growth, and each mature warehouse does roughly $295 million of sales — so the pipeline itself is worth something like $9 billion of annual revenue once it seasons, before any...
    Moat Explorer calculation: Costco FY2025 net sales of $269,912M over 134.7 million square feet and 914 warehouses; Sam's Club U.S. FY2026 net sales of $93,015M over 81 million square feet and 601 clubs — FY2025 vs Sam's Club FY2026 · publ. September 2026 · source ↗
  3. ReportedAt the third quarter of fiscal 2026 Costco operated 637 warehouses in the United States and 115 in Canada, and then a list that reads like a rounding error: 42 in Mexico, 37 in Japan, 29 in the United Kingdom, 20 in Korea, 15 in Australia,...
    Costco Form 10-Q, quarter ended May 10, 2026 - condensed financial statements and notes (total revenue $70,527M, operating income $2,815M, diluted EPS $4.93, balance sheet, segment table, 928 warehouses) — Q3 FY2026 and the first 36 weeks · publ. June 3, 2026 · source ↗
  4. ReportedOther International produced $38,266 million of revenue at a 4.33% operating margin in fiscal 2025 — a better margin than the United States' 3.44%.
    Costco Form 10-K, fiscal year ended August 31, 2025 - consolidated financial statements and notes (income statement, balance sheet, Note 11 segment reporting, disaggregated revenue by merchandise category, legal proceedings) — FY2025 · publ. October 8, 2025 · source ↗
  5. ReportedRetail advertising is the highest-margin revenue in modern retail and Costco's network, Costco Velocity, is small and late: an estimated $500 million or so against multi-billion-dollar businesses at Amazon and Walmart, with new placement...
    Walmart Form 10-K, fiscal year ended January 31, 2026 - Sam's Club U.S. segment (net sales $93,015M from 601 clubs and 81 million square feet, gross profit $10,556M, operating expenses $10,639M, membership and other income $2,525M, operating income $2,442M) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  6. ReportedCostco held $19,996 million of cash and short-term investments against $5,670 million of long-term debt at the third quarter of fiscal 2026, on a business that generates $13,335 million of operating cash flow a year and spends about half...
    Costco Form 10-Q, quarter ended May 10, 2026 - condensed financial statements and notes (total revenue $70,527M, operating income $2,815M, diluted EPS $4.93, balance sheet, segment table, 928 warehouses) — Q3 FY2026 and the first 36 weeks · publ. June 3, 2026 · source ↗
  7. ReportedIt repurchased only 943,000 shares in fiscal 2025 — the share count actually rose.
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 7 MD&A (net sales $269,912M, membership fees $5,323M, gross margin 11.12%, SG&A 9.25%, comparable-sales composition, capital expenditure, dividends and repurchases) — FY2025 · publ. October 8, 2025 · source ↗
Sources
Generated September 23, 2026