Investors looking for both strong business growth and massive addressable markets often end up at two familiar names: Amazon (AMZN 4.22%) and Alibaba (BABA -3.96%). Each has a powerful commerce engine, a fast-growing cloud platform, and a significant opportunity in AI infrastructure and applications.

But when you strip away headlines and focus on the operating results and the playbook for the next few years, one option stands out as the clear winner.

Amazon: broad-based, profitable growth

Amazon’s latest quarter showed healthy top-line growth and strong profit execution. Revenue rose double digits, with both its North America and international year-over-year growth rates in top-line revenue accelerating significantly, and Amazon Web Services (AWS) expanding at a rate of nearly 18% year over year. Operating income climbed sharply as the company continues to drive efficiency across fulfillment and cloud. It’s the kind of combination long-term investors want: growth with expanding earnings power.

Furthermore, AWS’s momentum and scale are extraordinary. The cloud-computing business’s annualized revenue run rate is now just over $123 billion. The business has powerful momentum in AI. For generative AI solutions, specifically, Amazon CEO Andy Jassy said in its second-quarter earnings call that it is growing sales by a triple-digit year-over-year percentage and has “more demand than we have supplied for at the moment.”

Highlighting the benefit of Amazon’s scale, the cloud computing segment’s operating margin remains robust — at 32.9% (adjusted to exclude the impact of foreign exchange headwinds) in Q2 — even as Amazon steps up investment in data centers, networking, and accelerators to meet AI demand.

Meanwhile, Amazon’s online store segment, where the company records e-commerce sales, grew by 11% year over year in Q2 — up from 5% growth in Q1. Similarly, the company’s high-margin advertising business clearly accelerated because Amazon’s other revenue segment, which primarily consists of advertising sales, grew 19% year over year in Q2 — up from a growth rate of 4% in Q1.

Alibaba: A cheaper valuation — but for a reason

Alibaba’s latest quarter gave investors a clear (and bullish) data point: accelerated cloud growth and the stock ripped higher. Revenue in its cloud intelligence segment rose 26% year over year, powered by an eighth quarter in a row of triple-digit year-over-year growth in AI-related product revenue.

The overall picture of Alibaba’s business, however, is more nuanced. Total revenue increased just 2% year over year, or 10% when excluding sales in the year-ago quarter from recently sold businesses. Further, Alibaba’s adjusted earnings before interest, taxes, and amortization (EBITDA) fell 14% year over year as the e-commerce and cloud-computing company leaned into what it calls “quick commerce,” or ultra-fast delivery, broader user experience investments, and AI. These heavy investments also meant that free cash flow went from positive in the year-ago quarter to negative.

A clear winner

Both stocks could end up being long-term winners. But Amazon ultimately offers the better risk-reward.

Alibaba is cheaper on traditional valuation multiples (but more expensive than it used to be after its recent sharp move higher) and is returning significant capital via buybacks and dividends. This lower valuation helps make up for the company’s lower growth and some of the risks associated with China’s weak macroeconomic backdrop. Indeed, given how cheap the stock’s valuations is (it currently trades at just 15 times earnings), Alibaba could end up being a bargain in hindsight. But only if China’s economy picks up speed and consumer and enterprise spending reaccelerate. If this happens, the upside in the stock price could be massive. But the company still has some things it needs to prove to investors to command a higher valuation multiple; it needs to demonstrate scalability, shown by operating margin expansion and free cash flow improvement, as Alibaba grows. We’re not there yet.

Ultimately, Amazon offers the cleaner, more reliable setup. The company has three growth vectors that reinforce one another: retail, advertising, and cloud — and each of these drivers will likely contribute substantially to Amazon’s business in the coming years. Retail keeps getting faster and more convenient, ads help further monetize the company’s e-commerce customers, and AWS offers investors a fast-growing, high-margin catalyst for the business. Together, Amazon’s broad-based catalyst of scaled and profitable business segments provides investors with more certainty when thinking about the company’s long-term potential.

If I had to pick just one of these two growth stocks today, I’d choose Amazon — despite its higher valuation of about 35 times earnings. The operating momentum is better, the AI strategy is tied to an already scaled platform, and the cash generation gives the company room to invest through cycles. Alibaba is investable and improving, but the execution bar (and ultimately the risk) is higher.

Daniel Sparks and his clients have 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.

Amazon (AMZN -0.00%) has been a tremendous stock for long-term investors, including its 55% gains over the past three years. But that’s only slightly outpaced the S&P 500 over that time, leaving some investors wondering if Amazon stock has permanently lost its luster.

I think that sentiment fails to account for Amazon’s strong position in some very big markets and how hard it will be for competitors to catch up. To that end, here are three reasons why it’s still a smart move to buy Amazon stock right now.

1. It has the third-largest digital ad business in the U.S.

Amazon is an advertising powerhouse as the No. 3 ad platform, after Alphabet and Meta Platforms. While those are certainly big shoes to fill, Amazon has made impressive gains over the past several years. Consider that Amazon had less than 11% of the U.S. digital market in 2021 and will have an estimated 17% by next year. That’s beginning to nip at the heels of Meta’s 21% market share.

Advertising is also Amazon’s fastest-growing business, with ad sales rising 23% in the second quarter to $15.7 billion. Unlike its rivals, Amazon’s ad sales have a built-in advantage for the company, as advertisers spend money to sell goods on Amazon’s platform, allowing the company to benefit from both the ad sales and the online purchases. And with the U.S. digital advertising market expected to grow into an estimated $220 billion market by 2030, there’s still room for Amazon to benefit.

2. It’s tapping into a $2 trillion AI opportunity

Some people have been disappointed with Amazon’s cloud revenue growth lately, but I think they miss the fact that Amazon has the largest cloud computing market share, with 30% compared to Microsoft‘s 21% and Google’s 12%.

Microsoft is certainly making lots of ground and shouldn’t be ignored. However, the AI cloud computing market will be worth an estimated $2 trillion by 2030, so there’s plenty of room for both companies to benefit.

What’s more, Amazon is still investing in its cloud computing business and will increase its capital expenditure spending to $118 billion this year, mostly to expand its AI infrastructure.

3. It still dominates in e-commerce

Amazon has about 38% of the U.S. e-commerce market share. It’s such a huge lead that some of the largest retailers barely register. Walmart‘s platform takes just 6% of the market, and Target has spent years improving its online offerings and still has only 2% of the U.S. e-commerce market.

Amazon not only has the first-mover advantage in this space but has also built an impressive bulwark against its competitors, boasting more than 200 million Prime members who choose to give Amazon money for access to faster shipping and perks like video streaming. Prime has been massively successful for the company, and the latest proof of that comes from its recent Prime Day event, which offered deals to new and existing Prime members and generated an estimated $24 billion in sales in just four days.

Keep this in mind when buying from Amazon

Amazon is the leading cloud computing company, its advertising business continues to grow, and its e-commerce prowess is unmatched. With all these foundations in place, the company is well-positioned to benefit as these markets grow.

Amazon’s shares are also priced relatively well right now, with a price-to- earnings (P/E) ratio of about 34, compared to the S&P 500’s average of about 29 and internet software companies’ average of about 52. Given that the company spans so many lucrative markets and is relatively cheaper than some internet companies, the stock still looks like a relatively good deal right now.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Target, and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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American retail giants Amazon and Walmart are reportedly considering the possibility of launching their own stablecoins.

This move could potentially change how consumers pay for goods online while helping large retailers reduce costly transaction fees.

A Cheaper Payment Alternative

According to the Wall Street Journal, both companies are mulling whether to create brand-specific coins or to adopt external stablecoins through a possible merchant-led consortium.

Amazon’s efforts are still in the early planning stages. Sources familiar with the matter said the firm is discussing the potential for an in-house token that could be used for purchases on its platform. Walmart is also weighing similar options and has been lobbying for reforms in the payment space that would support digital payment innovation.

By using stablecoins, the mega retailers could bypass traditional financial systems where merchants currently pay 1% to 3% per card transaction. This fee can add up to billions of dollars annually for companies processing high transaction volumes. Stablecoins offer an opportunity to cut these costs, with the added benefit of nearly instant settlement times compared to the one to three business days required for card payments.

The move comes as other major e-commerce players begin to adopt stablecoin-based transaction systems. Shopify recently announced plans to fully integrate USD Coin (USDC) payments into its platform via Coinbase’s Ethereum Layer-2 network, Base.

The feature is being launched through Shopify Payments and Shop Pay, with the official kick-off date set for the end of this year. The payment mechanism is also already available to selected merchants and includes incentives such as 1% cash back in local currency for customers.

Execution Still Dependent on Clear Regulation

However, future stablecoin use by major retailers could depend on upcoming legislation. The proposed GENIUS Act, which aims to create a clear regulatory framework for such digital assets in the United States, recently cleared another procedural step but still requires approval from both the Senate and the House.

The final Senate vote on the bill has been scheduled for June 17. In the meantime, trade groups have been actively engaging with lawmakers to support its passage. The Merchants Payments Coalition believes that clear rules for stablecoins would enable lower-cost payment options and introduce more competition to Visa and Mastercard.

Meanwhile, major U.S. banks like JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are also in the early stages of discussions about launching a joint stablecoin venture.