Amazon (AMZN 1.47%) and Home Depot (HD 2.75%) have very different businesses: Amazon's profits come primarily from cloud computing, while Home Depot's are from home improvement retail. But both are important consumer-focused businesses that are adapting to rapidly shifting business environments.
Here's which stock is currently the better buy.
Image source: Getty Images.
What's happening with Amazon
Amazon is trying to keep pace with its tech rivals as they all incorporate artificial intelligence (AI) into their products and services, which is why the company recently rolled out the more advanced version of Alexa.
But Amazon isn't stopping there. The company recently announced it's doubling capital expenditures this year to $200 billion to invest in new AI data center infrastructure. Much of the focus will be on boosting the capabilities of its Amazon Web Services (AWS), which makes sense given the demand for AI and the fact that AWS accounted for 56% of Amazon's operating profit in 2025.
AI cloud services will be worth an estimated $2 trillion by 2030, and rival Microsoft has been chipping away at AWS's market share over the past several years. The spending isn't a guarantee for Amazon's AI success, but it should help the company better position itself to fight off rising AI cloud competition.
NASDAQ: AMZN
Key Data Points
How Home Depot is weathering the housing slump
In the first nine months of 2025, Home Depot's sales rose 5.6% to $126.5 billion, but the company's earnings fell about 2% to $11.68 per share. The third-quarter results weren't great either, with the company missing its sales and earnings estimates for the quarter.
Home Depot CEO Ted Decker said storms in Q3 hurt the company's sales, along with continued pressure in the housing market. "We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand," Decker said.
NYSE: HD
Key Data Points
A dramatic increase in housing prices since the pandemic, combined with elevated interest rates, has kept America's housing market essentially frozen lately. Housing sales fell substantially in January, down 8% from December, in what the National Association of Realtors called "a new housing crisis."
That's been a huge problem for Home Depot, which benefits from both buyers and sellers in a hot housing market, with editing homeowners fixing up homes to sell them, and new buyers spending money to make upgrades and personalize their new homes.
With the housing market stuck in place for now, Home Depot may have to ride out this downturn for a while longer.
Verdict: Amazon is the better stock
Both Amazon and Home Depot have underperformed the market over the past year, but I think Amazon has the greatest potential to bounce back soon. The company appears on track to benefit from an influx of AI spending, and AWS remains a leading position in cloud computing with 28% market share.
Amazon stock is also well priced right now, with a price-to-earnings (P/E) ratio of just 28, compared to the average tech stock P/E ratio of 41. While both Home Depot and Amazon could be great stocks to own over the long term, the housing market being stuck in place makes me hesitate on buying Home Depot at the moment.
