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Amazon vs Alibaba: Which Growth Stock Reigns Supreme?
ByAinvest
Saturday, Aug 16, 2025 7:18 am ET1min read
Amazon's stock has outperformed Alibaba's over the long term, but Alibaba's stock has surged 50% this year compared to Amazon's 0% growth. Amazon's revenue and earnings growth are stronger, but Alibaba is expected to grow its earnings per share by 20% next year, compared to Amazon's 14.8% growth. Alibaba is the clear winner in terms of valuation.
Amazon's stock has historically outperformed Alibaba's, with Amazon delivering a jaw-dropping return of over 226,000% since its IPO in 1997, compared to Alibaba's 30% rise since its 2014 IPO. However, Alibaba's stock has surged 50% this year, while Amazon's stock has barely moved. Despite this short-term resurgence, Amazon's revenue and earnings growth have been stronger than Alibaba's. In the second quarter of 2025, Amazon's net sales jumped 13% year over year, while Alibaba's revenue increased by 7% [1].Looking ahead, analysts predict Amazon's revenue growth to be nearly 10% next year, compared to Alibaba's 8.3%. However, Alibaba is expected to grow its earnings per share by 20% next year, compared to Amazon's 14.8% growth [1]. This discrepancy suggests that Alibaba's earnings growth is more driven by cost reductions and margin expansion, rather than top-line growth.
Valuation-wise, Alibaba is the clear winner. Amazon's shares trade at a forward price-to-earnings ratio of 33.4, compared to Alibaba's 14.3. When growth is factored into the equation, Alibaba still comes out on top, with a price-to-earnings-to-growth (PEG) ratio of 1.28, versus Amazon's 2.57 [1].
Moreover, Alibaba is leveraging the current low capital costs to invest heavily in AI and cloud infrastructure. Its Qwen AI models have boosted e-commerce engagement by 30% and reduced logistics costs by 25%, enhancing margins and customer retention [2]. Alibaba's global cloud expansion and AI-driven fraud reduction also align with ESG trends, making it an attractive investment for sustainability-focused investors.
In conclusion, while Amazon's long-term stock performance has been impressive, Alibaba's recent stock surge and strong earnings growth prospects make it an attractive investment for investors seeking high growth and favorable valuation. However, investors should also consider the geopolitical risks associated with Alibaba's operations in China.
References:
[1] https://finance.yahoo.com/news/better-growth-stock-buy-now-095000627.html
[2] https://www.ainvest.com/news/rise-ai-driven-retail-giants-assessing-alibaba-undervalued-opportunity-2508/
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