Why's Everyone Talking About Costco Stock?

Costco Wholesale (COST -0.10%) doesn't grab headlines the way tech giants do, yet it's quietly become one of the most talked-about companies in the market. The stock trades near all-time highs and sits at a premium valuation, which naturally raises eyebrows. However, beneath the surface, Costco continues to deliver the kind of steady growth and loyalty that investors prize. This article will focus on three reasons investors are keeping a close eye on the company: its customer-first business model, its long runway for growth, and the question of whether today's valuation leaves enough upside. Image source: Getty Images. 1. Keeping users at the center of its business model Costco is not a typical retailer. It has built its identity around members, not margins. The bulk of its profit doesn't come from selling products, it comes from membership fees. In fiscal 2025 (year ended Aug. 31, 2025), those fees generated $5.3 billion in revenue, representing the bulk of Costco's net income of $8.1 billion. That's only possible because members stay loyal. Renewal rates exceed 90% in the U.S. and are close to that mark worldwide. Members keep coming back because they know Costco will pass savings on to them. The company famously operates on razor-thin markups, generally capping prices at a gross margin of around 14% to 15%, which is far below that of many competitors. The result is a retail ecosystem that reinforces itself. Customers feel valued, they renew their membership over time, and Costco reinvests in lower prices. Yet, the membership fees generate billions of bottom-line profits for Costco. It's a virtuous cycle that resembles a subscription platform more than a traditional retailer. Few retailers have managed to keep users firmly at the center of their model -- and it's the reason Costco has been able to compound its success steadily through decades of market shifts. 2. The giant still has plenty of room for growth With 914 warehouses worldwide, Costco still has significant white space ahead of it. Roughly two-thirds of those locations are in the U.S., leaving international markets as the next chapter. The company typically opens 20 to 30 new warehouses annually -- not flashy, but relentless. International stores have shown encouraging signs. In China, for instance, early openings drew huge crowds, reflecting strong demand for Costco's model in new markets. If Costco can replicate even a fraction of its North American success abroad, the growth runway extends well into the next decade. And expansion isn't just about physical warehouses. Costco has been investing in e-commerce and digital services, making it easier for members to shop online while still leveraging its buying power and low-cost ethos. With the growing role of Kirkland Signature, its private-label brand, Costco's long-term growth levers appear both diverse and durable. For investors, this means Costco is not just coasting on a mature U.S. business -- it's quietly building global scale and widening its moat in the process. 3. A word on valuation This is where the debate gets interesting. Costco currently trades at around 52 times earnings, a steep premium to its historical multiples and its peers. Investors are effectively paying up for certainty, which includes predictable recurring income, loyal members, and a long runway for expansion. That doesn't mean the stock is a bargain. Periods of multiple compression are possible, especially if consumer spending weakens or international growth takes longer to scale. Higher interest rates could also pressure premium multiples across defensive sectors. But for long-term investors, valuation alone rarely defines the Costco story. The company has earned its premium by delivering consistent growth across cycles, and its recurring membership base provides a cushion few retailers can match. The question is not whether Costco is "cheap" today, but instead whether it will continue to grow a decade from now. What does it mean for investors? Costco has become a market favorite because it combines three rare traits: a member-first model that generates sticky recurring revenue, a proven track record of long-term execution, and long-term expansion potential. Given the optimism, it is not surprising that the stock trades at a premium. But for long-term investors willing to hold through cycles, Costco remains one of the most interesting compounding stories in retail. That's why everyone is talking about Costco stock today -- and why they probably still will be a decade from now.