Better Growth Stock to Buy Right Now: Amazon or Alibaba?

Alibaba (BABA) has significantly outperformed Amazon (AMZN) in stock performance year-to-date 2025, despite Amazon reporting stronger Q2 2025 revenue growth (13% vs. 7%) and net income growth (35% vs. Alibaba's adjusted 22%). While analysts project Amazon to have slightly higher revenue growth next year, Alibaba is forecast for stronger EPS growth (20% vs. 14.8%). Crucially, Alibaba presents a far more attractive valuation, trading at a forward P/E of 14.3x compared to Amazon's 33.4x, though it carries higher geopolitical risk related to Chinese government intervention, making it a more aggressive investment choice.

Analysis

The current investment landscape presents a distinct trade-off between Alibaba (BABA) and Amazon (AMZN). While Alibaba's stock has surged nearly 50% year-to-date in 2025, significantly outpacing Amazon, its underlying operational growth is comparatively weaker. Amazon posted stronger Q2 2025 results with 13% year-over-year revenue growth and 35% net income growth, compared to Alibaba's 7% revenue increase and 22% adjusted earnings growth. Looking ahead, analyst consensus projects a continuation of this trend, with Amazon forecasted for higher revenue growth (10% vs. 8.3%), but Alibaba expected to deliver superior earnings per share growth (20% vs. 14.8%). The primary divergence lies in valuation, where Alibaba is demonstrably cheaper, trading at a forward P/E of 14.3 and a PEG ratio of 1.28, versus Amazon's 33.4 forward P/E and 2.57 PEG. This significant valuation discount on Alibaba is largely attributable to the unquantifiable geopolitical risk associated with potential Chinese government interference, creating a classic risk-versus-reward scenario for investors.

Key Decisions for Investors

• Investors with a higher risk tolerance may find Alibaba's deep valuation discount and superior projected EPS growth of 20% compelling, presenting a potential value and growth opportunity.
• More risk-averse investors seeking stability should consider Amazon's stronger fundamental growth and absence of direct Chinese regulatory risk, despite its significantly higher valuation multiples.
• Portfolio managers holding or considering BABA must actively monitor Chinese regulatory announcements as this remains the primary risk factor, while those holding AMZN should track cloud and e-commerce growth to ensure it continues to justify its premium valuation.