Both Amazon and Alibaba continue to grow, but Amazon is achieving faster and more balanced growth. Both companies utilize artificial intelligence (AI) and maintain extensive e-commerce platforms, but which stock is the better investment now? The answer depends on their momentum, business stability, and stock valuations.
Amazon’s Growth Is Diverse and Strong
Amazon has shown impressive growth with its third-quarter 2025 results. Total sales increased by 13% year over year, supported by various revenue streams. Online store revenue grew by 10%, third-party seller services revenue rose by 12%, and subscription services, including Prime, increased by 11%.
- Market Cap: $2.6T
- Current Price: $246.44
- Gross Margin: 50.05%
- 24% growth in advertising revenue
A significant part of Amazon’s growth stems from Amazon Web Services (AWS), which saw a 20% increase year over year. CEO Andy Jassy noted strong demand for AI-related services, accelerating AWS’s growth to a pace not seen since 2022. However, this growth comes at a cost; Amazon’s free cash flow dropped from $47.7 billion to $14.8 billion mainly due to high capital expenditures for expanding cloud infrastructure.
Alibaba’s Cloud Is Stronger, Overall Growth Is Spotty
Alibaba reported a 5% year-over-year revenue increase in its most recent quarter, falling short compared to Amazon. Despite this, some segments are thriving, particularly its Cloud Intelligence Group, which experienced a 34% revenue increase tied to strong AI demand. CEO Eddie Wu confirmed that AI product revenue grew by triple digits for nine consecutive quarters.
- Market Cap: $374B
- Current Price: $166.31
- Gross Margin: 40.73%
- 10% increase in customer management revenue
Alibaba also saw a 9% increase in its overall e-commerce revenue and significant growth in its quick commerce segment, which rose by 60%. However, the company warned that it is in an “investment phase,” leading to fluctuating profitability. The latest figures showed a substantial decline in operational income and a transition to negative free cash flow, largely due to investments in cloud infrastructure.
Why Choose Amazon Over Alibaba?
Both companies have strong AI and cloud services, but Amazon’s overall growth outpaces Alibaba’s. Although Amazon’s shares carry a higher price-to-earnings ratio of 30 compared to Alibaba’s 20, it offers a more straightforward growth profile. Alibaba might improve if it continues to gain momentum in its cloud services, but its overall modest growth and uncertain profitability pose higher risks for investors.
For those seeking immediate growth potential, Amazon is currently the preferable option.
Why is Amazon growing faster than Alibaba?
Amazon’s diversified revenue streams contribute to its rapid growth.
What challenges does Alibaba face?
Alibaba experiences fluctuating profitability due to heavy investments.
How do their price-to-earnings ratios compare?
Amazon’s P/E ratio is 30; Alibaba’s is 20.
