Amazon vs. Alibaba: Which E-Commerce Titan Has an Edge Right Now?

Amazon AMZN and Alibaba Group BABA are the world's two largest e-commerce and cloud computing empires. Both are aggressively investing in AI and cloud infrastructure, making this comparison timely for investors.

While Amazon leverages its logistics network and Amazon Web Services (AWS) dominance, Alibaba is repositioning as China's AI platform. Let's delve deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.

The Case for AMZN Stock

Amazon enters 2026 with considerable momentum across its core business segments. The company's fourth-quarter 2025 results showcased net sales of $213.4 billion, up 14% year over year, driven by robust performance across North America, International and AWS. 

AWS remains Amazon's crown jewel, delivering 24% revenue growth — its fastest pace in 13 quarters — with an annualized run rate of approximately $142 billion. The segment's order backlog surged 40% year over year to $244 billion, signaling strong multi-year demand visibility. Amazon's custom silicon strategy is gaining significant traction, with Trainium and Graviton chips generating a combined annual revenue run rate exceeding $10 billion, growing at triple-digit rates. The company recently launched Graviton5, its most powerful CPU, alongside EC2 G7e instances powered by NVIDIA Blackwell GPUs, and expanded Amazon Bedrock with more than 20 fully managed models. AWS also secured landmark agreements with OpenAI, Visa, the NBA, BlackRock and the U.S. Air Force in early 2026.

Looking ahead, Amazon guided first-quarter 2026 net sales between $173.5 billion and $178.5 billion with operating income of $16.5-$21.5 billion. The company plans approximately $200 billion in 2026 capital expenditures, predominantly toward AWS and AI infrastructure, reflecting management's strong confidence in sustainable long-term returns. Amazon's diversified revenue streams spanning e-commerce, cloud, advertising and emerging ventures like Project Kuiper provide a resilient growth foundation that very few global competitors can realistically match.

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

The Case for BABA Stock

Alibaba's second-quarter fiscal 2026 results painted a mixed picture, highlighting ongoing challenges alongside pockets of promise. Revenues reached RMB 247.8 billion, a modest 5% year-over-year increase, while non-GAAP diluted earnings plunged 71% as the company poured resources into strategic investments. Total adjusted EBITDA declined a staggering 78%, raising serious questions about the sustainability of Alibaba's growth-at-any-cost approach in an increasingly competitive landscape.

The Cloud Intelligence Group delivered 34% revenue growth with AI-related products posting triple-digit gains for the ninth consecutive quarter. Alibaba committed RMB 380 billion over three years toward AI and cloud infrastructure and open-sourced nearly 400 models under its Qwen family, which crossed 700 million cumulative downloads on Hugging Face by late 2025. However, Alibaba Cloud's growth occurs within an environment constrained by U.S. chip export restrictions and geopolitical tensions that limit access to advanced computing hardware, creating a persistent overhang on its long-term cloud trajectory.

The quick commerce business, while growing revenues 60%, incurred significant losses that more than doubled sales and marketing expenses to RMB 66 billion. Management acknowledged that maintaining e-commerce market share against JD.com, Meituan and Pinduoduo remains the top priority, suggesting continued margin pressure ahead.

Regulatory uncertainty in China, although easing from its 2021 peak, continues weighing on investor sentiment and limits meaningful valuation expansion. Forward guidance suggested EBITDA may fluctuate due to intense competition, and free cash flow showed an outflow of RMB 21.8 billion, driven by aggressive investment spending, further concerning profitability-focused investors who seek clearer paths to sustained earnings growth.

Alibaba Group Holding Limited Price and Consensus

Alibaba Group Holding Limited price-consensus-chart | Alibaba Group Holding Limited Quote

Valuation and Price Performance Comparison

While Alibaba stock surged 28.3% in the last six-month period, significantly outperforming Amazon's 14.1% decline, this largely reflects recovery from previously depressed levels rather than fundamental outperformance. Both companies trade at premium valuations, though Amazon commands a significantly higher multiple.

AMZN Underperforms BABA In 6 Months

Alibaba's valuation metrics show a 2.29x price-to-sales ratio, representing steep discounts compared to Amazon's 2.61x price-to-sales. Amazon's higher valuation reflects its superior market position, predictable cash flows and lower regulatory risks, justifying the premium despite seemingly stretched metrics.

AMZN vs. BABA P/S Ratio

Conclusion

Amazon holds a clear edge over Alibaba across multiple dimensions. AWS' accelerating growth, $244 billion backlog and custom chip momentum provide superior revenue visibility compared to Alibaba Cloud's growth within a geopolitically constrained environment. Amazon's diversified revenue engine across e-commerce, cloud and advertising generates more predictable cash flows, while Alibaba's aggressive spending on quick commerce and AI infrastructure is eroding profitability without guaranteed returns. With justified premium valuation, lower regulatory risk and stronger forward guidance, Amazon emerges as the better-positioned stock. Investors should watch Amazon for better and more attractive entry points while staying away from Alibaba stock right now. AMZN currently carries a Zacks Rank #3 (Hold), whereas BABA has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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