Stock Showdown: Alibaba Group Holding Ltd (BABA) vs. Amazon.com, Inc. (AMZN); Which Is a Better Buy?

From a profit and potential perspective, however, Alibaba seems to be better than Amazon. Alibaba is trading at a forward P/E of 21.5, while Amazon’s stock has a forward P/E of 117. Alibaba’s potential is also higher than Amazon’s. While China’s economy isn’t doing very well right now, its growth will still be faster than the United States’ in the long run. Given that Alibaba garners over 80-90% of its revenue from China and Amazon gets two thirds of its revenue from North America, Alibaba’s earnings growth will likely grow faster than Amazon’s earning growth if each maintain their respective market shares.

Given Alibaba’s cheaper valuation and China’s potential, however, we like Alibaba more as a long term holding, although we acknowledge the market can be more irrational for longer than many investors would like.

Disclosure: none