Both Amazon (AMZN 1.61%) and Alibaba Group (BABA 1.75%) are using AI (artificial intelligence) to improve their products and sell more services. And both of the e-commerce giants have massive online shopping platforms that touch millions of consumers and businesses every day. But which of these two companies makes for a better growth stock to buy right now?
The answer will boil down to a few things, including the companies' momentum today, the durability of their underlying businesses, and their stocks' valuations.
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Amazon's growth is broad-based
Amazon's third-quarter 2025 results show both a diversified and fast-growing business. Its total sales rose 13% year over year.
This growth was fueled by a range of businesses. Amazon's online stores revenue rose 10% year over year in the quarter. Third-party seller services revenue, which includes fees Amazon collects when other merchants sell on its site, increased 12%. And even subscription services revenue, which includes Prime memberships, rose 11%.
NASDAQ: AMZN
Key Data Points
Then there's advertising -- one of Amazon's most important newer growth engines. Advertising services revenue increased 24% year over year in the third quarter.
But the biggest story for growth investors is still Amazon Web Services, or AWS. AWS is Amazon's cloud computing business. AWS revenue rose 20% year over year in the third quarter. In the company's earnings release, Amazon CEO Andy Jassy pointed directly to strong AI-related demand, stating that AWS is growing at a pace the company hasn't seen since 2022.
There is a cost to this, however -- and investors should be aware of it. Amazon is spending aggressively to expand data center capacity. The company said trailing-12-month free cash flow fell from $47.7 billion in the year-ago period to $14.8 billion -- driven primarily by soaring capital expenditures related to infrastructure to support further rapid growth in cloud.
Alibaba's cloud is surging, but the rest is bumpier
Alibaba's revenue in its most recent quarter showed progress, but growth wasn't as robust or broad-based across its business as it has been for Amazon's. Revenue during the period increased 5% year over year -- meaningfully slower than Amazon.
To be fair, there are bright spots. Alibaba's Cloud Intelligence Group revenue increased 34% year over year in the September quarter -- a sharp acceleration over 26% growth in the period ended three months earlier. Management tied this to "Robust AI demand," and CEO Eddie Wu said AI-related product revenue delivered "triple-digit year-over-year growth for the ninth consecutive quarter."
Alibaba also showed strength in parts of its e-commerce business. Revenue from its overall e-commerce business increased 9% year over year, and customer management revenue, which is largely the monetization Alibaba earns from merchants and is a subsegment of its broader e-commerce business, rose 10%. The company also highlighted a fast-growing "quick commerce" effort (ultra-fast delivery), with quick commerce revenue up 60% year over year.
NYSE: BABA
Key Data Points
One issue, however, is what it is costing to pursue all of this at once. Alibaba management said in its most recent earnings call that it is in an "investment phase" and explicitly warned that near-term profitability is expected to fluctuate. And the numbers backed that up: Alibaba's fiscal second-quarter (its most recently reported quarter) income from operations fell sharply year over year, and the company's free cash flow moved from an inflow in the year-ago quarter to an outflow, which management tied largely to investment in quick commerce and cloud infrastructure.
Which stock stands out?
Both companies have impressive AI and cloud businesses with a lot of momentum, and Alibaba's cloud growth is especially impressive right now. Still, if you are choosing a growth stock to buy today, Amazon boasts faster overall growth and a range of large growth engines delivering at the same time, so I think it is the better choice.
Sure, investors have to pay a steeper valuation to buy into Amazon's faster and broader growth story. Amazon shares trade at a price-to-earnings ratio of 30, and Alibaba's is 20. Further, Alibaba could absolutely work if cloud momentum continues and if management's heavy investment leads to stronger, more consistent growth over time. But the risks are greater for Alibaba, as its overall growth rate is still modest, and the company is openly telling investors to expect profitability to be unpredictable as it spends aggressively.
For investors who want the more straightforward growth profile right now, Amazon is the better buy.
