Alibaba vs. Amazon: Which E-Commerce Titan Is the Better Buy Now?

Core Insights - Alibaba (BABA) and Amazon (AMZN) are two leading players in global e-commerce, but their paths diverge significantly by late 2025, with contrasting investment narratives and strategic focuses [1][2] Alibaba Overview - Alibaba's Q3 2025 results showed cloud revenues increasing by 34% year over year, while overall revenues grew by only 5% to 247.8 billion yuan ($35 billion) [4] - The company experienced a 16% rise in Chinese e-commerce revenues, but net income fell by approximately 50% due to increased spending on consumer subsidies and data centers [4] - Free cash flow turned negative, with an outflow of RMB 21.8 billion, reversing from a RMB 13.7 billion inflow in the previous year, raising concerns about the sustainability of investments [5] - China's macroeconomic challenges and intensified competition from JD.com and Meituan are additional hurdles, alongside regulatory uncertainties that could impact stock valuation [6][7] Amazon Overview - Amazon's Q3 2025 results showed revenues rising by 13% year over year to $180.2 billion, with AWS revenues accelerating by 20% to $33 billion, marking the fastest growth since 2022 [8][10] - Net income surged by 38% to $21.2 billion, exceeding estimates, which validates Amazon's investments in AI and cloud infrastructure [8][10] - Amazon secured a $38 billion multi-year partnership with OpenAI, enhancing its competitive position in AI services [10] - The North America segment sales increased by 11% to $106.3 billion, while international segment sales grew by 14% to $40.9 billion, indicating sustained strength in retail operations [11] Valuation and Performance Comparison - Amazon trades at a forward P/E ratio of 30.08, while Alibaba trades at a lower forward P/E of 18.63, reflecting Amazon's superior fundamentals [13][16] - Amazon's market share in global cloud infrastructure is 29%, with a positive free cash flow of $14.8 billion, contrasting with Alibaba's negative cash flow trajectory [16] - Despite Alibaba's stock surging by 42.9% in the past six months, this is attributed to recovery rather than fundamental outperformance [17] Conclusion - Amazon is positioned for better upside potential due to strong AWS momentum, diversified revenue streams, and operational excellence, while Alibaba needs to demonstrate sustainable profitability to regain investor confidence [18]