From Warehouse Powerhouse to Blue Chip: Why Costco Could Be Next for the Dow

By Trey Thoelcke Published Apr 15, 8:20AM EDT

Quick Read

With Costco’s (COST) $432 billion market cap and hefty share price, does it belong in the Dow Jones Industrial Average?
Whether or not the Dow committee comes calling, the underlying business continues to earn its blue-chip reputation quarter after quarter.
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From Warehouse Powerhouse to Blue Chip: Why Costco Could Be Next for the Dow — © 2021 Getty Images / Getty Images News via Getty Images

Costco Wholesale (NASDAQ: COST | COST Price Prediction) has built one of the most durable retail franchises in the world, and with a market cap of roughly $432 billion, investors are asking a reasonable question: should it be in the Dow Jones Industrial Average?

How Dow Inclusion Actually Works

The Dow Jones Industrial Average is not a rules-based index. A committee manages the selection process, with no automatic trigger for inclusion. The index is price-weighted, meaning a higher share price carries more influence over the index’s daily moves. Because the Dow is price-weighted, Costco’s high share price (currently near $975, within a 52-week range of $844.06 to $1,067.08) means it would immediately become one of the most influential components in the index if added. At that price, Costco would immediately rank among the heaviest-weighted components if added.

The Case for Costco

The fundamentals are hard to argue with. In FY2025, Costco posted revenue of $275.235 billion, up 8.17% year over year, with net income of $8.099 billion, up 9.94%. The most recent quarter showed no slowdown: Q2 FY2026 revenue reached $69.597 billion, up 9.22%, with EPS of $4.58, beating estimates by 0.78%.

The membership model provides a recurring revenue layer that most retailers cannot match. Paid memberships stood at 82.1 million in Q2 FY2026, with a worldwide renewal rate of 89.7%. Membership fee income reached $1.355 billion in Q2 FY2026, up 13.6% year over year. That kind of customer loyalty is exactly the profile the Dow committee looks for in a blue-chip representative.

Digital momentum adds another layer. App visits grew 63% in Q2 FY2026, e-commerce site traffic rose 32%, and average order value climbed 15%. The company also has a 10-year return of 659.37%, a record that outpaces virtually every major retailer over the same period.

Headwinds to Watch

Walmart (NASDAQ: WMT) already represents consumer and retail in the Dow, which limits the committee’s appetite for a second warehouse/retail name. Costco pays a dividend, but it remains modest relative to other Dow components. Tariff uncertainty and foreign exchange volatility also cloud the near-term outlook for a company with meaningful international operations.

Retail sentiment has been mixed. A widely circulated Reddit post in late March asked, “If 35x earnings felt wild for Costco, how are we supposed to feel about 50x?” The post gathered 297 upvotes and 125 comments, reflecting genuine valuation debate among retail investors.

What Wall Street Thinks

Analyst consensus leans constructive. Twenty analysts carry Buy ratings and three have Strong Buy ratings, alongside 12 Holds and two Sells. The $1,067.94 consensus price target signals almost 10% upside. Whether or not the Dow committee comes calling, Costco’s underlying business continues to earn its blue-chip reputation quarter after quarter.

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.