Better Stock: Amazon or Alibaba?

Core Viewpoint - Amazon and Alibaba are both giants in the global tech landscape with potential for long-term growth, but they require different investment mindsets [1] Group 1: Similarities - Both companies originated in e-commerce and have diversified into various sectors, including cloud computing, advertising, logistics, and media [4][5] - They have diversified their revenue streams, making their business models more resilient to external changes and allowing for capital allocation to high-growth areas like AI and cloud computing [6] - Both companies share values such as customer delight, innovation, and long-term thinking, influenced by their founders, Jeff Bezos and Jack Ma [7][8] Group 2: Differences - Amazon operates a first-party retail business alongside a third-party marketplace, while Alibaba functions purely as a platform connecting buyers and sellers without holding inventory [9] - Amazon has a massive logistics network, whereas Alibaba's logistics arm, Cainiao, employs an asset-light model [10] - The profit margins differ significantly due to their business models; Alibaba's capital-light model is highly profitable, while Amazon's retail operations compress margins [11] Group 3: Geographic and Market Position - Amazon has a broad international presence, while Alibaba is primarily focused on China but is expanding through platforms like AliExpress and Lazada [12] - Amazon Web Services (AWS) leads the global cloud computing market with over 30% share, while Alibaba Cloud holds a 4% global share, limited by access to advanced technology and geopolitical challenges [12][13] Group 4: Valuation and Investment Considerations - As of the latest data, Amazon has a price-to-earnings (P/E) ratio of 35, while Alibaba's is at 14, indicating Alibaba is significantly cheaper [14] - Amazon's premium valuation reflects its strong global positioning and leadership in AI and cloud, while Alibaba's discount is attributed to its exposure to regulatory risks in China [15] - For investors seeking stability and long-term growth, Amazon is a favorable option, while those willing to accept geopolitical risks may find Alibaba undervalued despite its profitable core business [16][17]