Alphabet vs. Amazon: Both AI Stocks Are Down, but One Is a Better Buy Now
Tech stocks tumbled in 2026, with recent trading days adding to the pain for investors. Even industry leaders love it. alphabet (GOOG 0.23%)(google 0.31%) and Amazon (AMZN +0.81%) They’ve seen their stocks take a hit. As of this writing, both stocks are down about 13% year to date.
Both technology companies are investing aggressively in artificial intelligence (AI) infrastructure, and their recent sales make them look like attractive opportunities. But which of these two tech giants is better to deploy capital now?
Let’s look at some basic business fundamentals to find out.
Image source: The Motley Fool.
Amazon’s Cloud Reacceleration
Amazon is firing on all cylinders, especially: cloud computing.
In the fourth quarter of 2025, the e-commerce giant reported net sales of $213.4 billion, up 14% year over year.
However, its cloud computing business, Amazon Web Services, is growing meaningfully faster than its integrated business. This important segment generated $35.6 billion in revenue during the period, representing a 24% year-over-year growth rate. This is a notable acceleration compared to the 20% growth Amazon Web Services reported in Q3 2025. Management specifically pointed to customer demand for AI workloads as a key driver of this momentum.
today’s change
(0.81%) $1.61
current price
$200.95
Key data points
market capitalization
$2.1T
work range
$199.99 -$203.80
52 week range
$161.38 -$258.60
volume
2.1 million
average volume
50M
gross profit
50.29%
However, this growth requires significant investment. Amazon expects to spend approximately $200 billion in capital expenditures in 2026. The company expects strong long-term returns on this capital, but an expenditure of that scale leaves little room for execution error.
Alphabet’s spectacular cloud expansion
Alphabet’s recent performance is arguably even more impressive. The search giant reported consolidated revenue of $113.8 billion in the fourth quarter of 2025, up 18% from the same period last year.
Like Amazon, Alphabet is benefiting enormously from the artificial intelligence boom. But the benefits are even bigger than that. Google Cloud’s fourth quarter revenue hit $17.7 billion, a remarkable 48% increase compared to the same period last year. This cloud computing sector is currently operating at an annual run rate exceeding $70 billion.
And Alphabet’s core Google Services business remains highly profitable, with search and other revenue growing 17% year-over-year in the fourth quarter.
Like Amazon, Alphabet also expects significant spending this year. The company expects capital expenditures to reach $175 billion to $185 billion in 2026 as it builds capacity to meet surging customer demand.
Is it better to buy Alphabet or Amazon stock now?
Both companies are spending heavily to seize AI opportunities, but Alphabet appears to see more immediate rewards in the cloud.
When comparing the two, Alphabet’s 48% cloud growth rate easily surpasses Amazon’s 24% pace. AI also appears to further complement Alphabet’s overall ecosystem, improving everything from search results to YouTube recommendations in tangible ways.
In fact, Alphabet CEO Sundar Pichai noted in the company’s fourth-quarter update that AI is driving an “expansive moment” in its core search business.
today’s change
(-0.31%) $-0.84
current price
$273.50
Key data points
market capitalization
$3.3T
work range
$272.11 – $277.09
52 week range
$140.53 – $349.00
volume
35M
average volume
33M
gross profit
59.68%
dividend yield
0.31%
Then there is the evaluation.
Alphabet trades for a price-to-earnings ratio of around 25. Meanwhile, Amazon offers a slightly higher price-to-earnings ratio of around 28.
Choosing between these two tech giants is difficult. Because both look attractive after recent declines. But if I had to choose just one, I think it’s better to buy Alphabet for now. The search company offers both much faster cloud growth and a slightly cheaper valuation, giving investors a better setup for the long term.
Of course, both stocks have risks. For example, both companies’ profit margins could be pressured if the rewards from building their respective infrastructure take longer than expected. Nonetheless, given its outstanding cloud momentum and low valuation multiple, we think Alphabet is an attractive investment here.
