Amazon vs. Alibaba: Two E-Commerce Giants, a Big Valuation Gap, but Which Offers More Upside in 2027?

Can Western dominance in cloud and commerce outperform Eastern scale and a cheaper valuation? Choosing between Amazon.com (NASDAQ:AMZN) and Alibaba (NYSE:BABA) requires weighing domestic growth against international expansion.

Amazon focuses on logistics and cloud infrastructure to serve global consumers and enterprises. Alibaba leverages its vast ecosystem in China and emerging markets to facilitate trade and cloud services. Investors often compare them as the primary titans of their respective regions, each offering unique paths to long-term growth.

The case for Amazon.com

Amazon operates a massive logistics network and online marketplace, serving millions of global consumers through its dominance among retail stocks and cloud services. Its revenue comes from online retail, third-party seller services, advertising, cloud infrastructure, and Prime subscriptions, providing several sources of growth across consumer and enterprise markets.

In FY 2025, Amazon generated $716.9 billion in revenue, an increase of 12.4% year over year. Net income reached $77.7 billion, resulting in a profit margin of approximately 10.8%. Growth was supported by its retail operations and Amazon Web Services (AWS), which reported a 20% increase in annual sales as demand for cloud computing and artificial intelligence (AI) infrastructure continued to expand.

Amazon ended 2025 with a current ratio of approximately 1.1x and a debt-to-equity ratio of 0.4x when including lease liabilities. Free cash flow totaled $11.2 billion, down from $38.2 billion in 2024, as the company substantially increased capital spending on AI infrastructure. While these investments are weighing on near-term cash generation, they could strengthen Amazon's long-term position in cloud computing and artificial intelligence.

The case for Alibaba

Alibaba operates one of China's largest e-commerce and cloud computing platforms, serving consumers and businesses through Taobao, Tmall, and Alibaba Cloud. The company also maintains a growing international presence through platforms such as AliExpress, Lazada, and Alibaba.com, providing exposure to online retail, digital services, and enterprise technology markets.

In FY 2026, Alibaba generated $148.4 billion in revenue, an increase of 2.7% year over year. However, excluding businesses sold during the year, revenue increased approximately 11%, reflecting stronger growth across its continuing operations. Net income reached $14.8 billion, down approximately 19% from the prior year, resulting in a profit margin of 10%. The results highlight Alibaba's continued business expansion alongside pressure on profitability.

Alibaba ended fiscal 2026 with a debt-to-equity ratio of approximately 0.25x, excluding lease liabilities, and a current ratio of 1.3x. Free cash flow was negative $6.8 billion, compared with positive $10.7 billion the previous year, as the company significantly increased investments in AI and cloud computing infrastructure. While these expenditures could support future growth, they have placed considerable pressure on near-term cash generation.

Risk profile comparison

Amazon.com faces intense global competition from other technology giants in the retail and cloud sectors. Regulatory scrutiny regarding monopolization and data privacy remains a significant concern for the business. Additionally, the company manages operational risks related to its massive fulfillment network and potential liabilities from fraudulent activities by third-party sellers on its marketplace.

Alibaba operates in a complex regulatory environment that impacts its core e-commerce and cloud computing segments. The company must navigate intense competition from domestic rivals and shifting consumer habits within the Chinese market. Furthermore, geopolitical tensions and changes in international trade policy can affect its ability to expand successfully into other global markets over the next few years.

Valuation comparison

Alibaba appears cheaper, carrying a lower Forward P/E based on future earnings estimates and a lower P/S ratio based on sales over the past twelve months.

Metric	Amazon.com	Alibaba
Forward P/E	18.7x	14.8x
P/S ratio	3.3x	1.6x

Valuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy for 2027?

Alibaba looks particularly attractive from a valuation standpoint. Trading at 14.8 times forward earnings and 1.6 times sales, the company is considerably cheaper than Amazon, which trades at 18.7 times forward earnings and 3.3 times sales. Alibaba also has significant growth potential as it expands its cloud computing business and invests heavily in artificial intelligence infrastructure. However, intense competition in China, regulatory uncertainty, and pressure on profitability remain important considerations.

Amazon commands a premium, but that valuation appears justified by its stronger financial performance. Revenue increased 12.4% in 2025, compared with Alibaba's 2.7% growth, while AWS continues to benefit from accelerating demand for cloud computing and AI services. Both companies are spending heavily on infrastructure, but Amazon's stronger revenue momentum and more diversified business provide greater confidence in its ability to generate long-term returns.

For investors heading into 2027, Amazon looks like the better buy. Alibaba offers an appealing valuation and potentially greater upside if its growth accelerates, but Amazon's established competitive advantages, stronger earnings momentum, and exposure to the AI investment cycle make it the more compelling holding.

RJ Fulton has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.