Is Amazon a Better Stock to Buy Right Now Than Costco? The Answer Might Surprise You.

Core Viewpoint - 2025 is proving to be a challenging year for Amazon, with shares down over 20% year to date, while Costco has seen a 7% increase in its stock price, indicating a stark contrast in performance between the two companies [1][2]. Group 1: Company Performance - Amazon's shares have fallen more than 20% year to date, and the company has paused new data center leases, despite previous statements from CEO Andy Jassy about ongoing expansion plans [1]. - Costco's shares are up around 7% year to date, reflecting strong performance amidst market turbulence [2]. - Costco's business is less affected by economic headwinds compared to Amazon, which is facing challenges from tariffs and inflation concerns [3]. Group 2: Economic Impact - Approximately one-third of Costco's U.S. sales come from imported products, but less than half of those are from countries with the highest tariffs, allowing Costco to mitigate some tariff impacts [4]. - Costco's CEO emphasized the company's ability to minimize tariff-related cost increases for members, highlighting the brand's value proposition during uncertain economic times [5]. Group 3: Growth Potential - Amazon's sales increased by 10% year over year in its most recent quarter, while Costco's sales rose by 9.1%, indicating competitive growth rates [6]. - Amazon's earnings nearly doubled year over year in Q1 to $20 billion, while Costco's net income increased by only 2.6% [7]. - Analysts predict Amazon's earnings will grow by 19.6% next year, compared to Costco's expected 10.7% increase [7]. Group 4: Long-term Prospects - Amazon has more avenues for profitability and growth compared to Costco, with significant potential in areas like artificial intelligence, healthcare, and satellite internet [8][9]. - The long-term growth prospects for Amazon are viewed as more favorable than Costco's safe haven appeal, particularly for investors focused on growth [10]. Group 5: Valuation Comparison - Amazon's forward price-to-earnings ratio is 26.2, which is considered cheap compared to Costco's forward earnings multiple of 54.4, suggesting that Amazon may offer better value for growth-oriented investors [11][12]. - Despite Costco's recent strong performance, Amazon is expected to be the bigger winner over the next decade due to its growth potential [12].