Amazon (NASDAQ:AMZN) vs Alphabet (NASDAQ:GOOGL): Battle of Tech Titans
Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) sit at the center of U.S. megacap tech, commanding a combined market value above $5.3 trillion. Both stocks are trading near record highs — AMZN around $236, GOOGL at $234 — yet their growth drivers and margin profiles diverge sharply, creating different risk–reward trade-offs for investors.
Revenue Growth and Scale
Amazon posted Q2 2025 revenue of $167.7 billion, up 13% year over year, with net income surging to $18.2 billion or $1.68 EPS. Alphabet in the same period delivered $95.3 billion in revenue, up 12%, with net profit of $23.9 billion or $1.89 EPS. Amazon’s top line remains nearly double Alphabet’s quarterly revenue, but Alphabet extracts higher profitability margins thanks to its dominant digital advertising business.
On a trailing twelve-month basis, Amazon’s revenue runs above $640 billion, compared with Alphabet’s $371 billion, yet Alphabet’s operating margins hover near 28%, while Amazon’s consolidated margins are still below 15% as heavy logistics and capex weigh on results.
Cloud and AI Growth Drivers
Amazon Web Services generated $30.9 billion in quarterly revenue, growing 17%, accounting for only 18% of total revenue but 53% of operating profit. AWS remains Amazon’s golden goose, with Anthropic’s $183 billion valuation and its Claude 5 training workloads expected to add a tailwind. Amazon is building three dedicated campuses for Anthropic with 1.3GW of capacity and nearly one million Trainium2 chips, positioning AWS to re-accelerate growth into the 20% range.
Alphabet Cloud, by contrast, grew 32% year over year to $13.8 billion in Q2, outpacing AWS’s growth rate but from a smaller base. With Google DeepMind, VEO 3, and Gemini Ultra driving AI adoption, Alphabet is positioning Cloud as a growth wedge into its ad-dominated model.
Advertising Engines
Alphabet’s $64 billion in quarterly ad revenue remains its core profit engine, supporting consistent buybacks and dividend initiation. YouTube, Search, and Google Ads continue to deliver high-margin growth, giving GOOGL the firepower to fund AI bets without margin compression.
Amazon’s ads unit, though smaller, has become a key profit lever. Its Q2 ad revenue rose 22% year over year to $12.9 billion, now the company’s fastest-growing segment. Ads and AWS together are pushing Amazon’s blended margins higher, a critical factor for long-term multiple expansion.
Capital Expenditure and Free Cash Flow
Amazon is the most capital-intensive of the megacaps. Management raised 2025 capex guidance to $118 billion, with heavy spend on AWS data centers, logistics robotics, and Project Kuiper satellites. This weighed on free cash flow, which dropped to $18.2 billion trailing twelve months, down from $53 billion a year earlier. Alphabet by comparison generated $95 billion in free cash flow TTM, supported by leaner operations and less capex intensity.
Amazon’s capex is designed to secure future AI and satellite revenue streams, but in the near term it compresses free cash flow yield. Alphabet’s lower capex relative to revenue gives it stronger buyback and dividend flexibility.
Hedge Fund and Insider Activity
Amazon has seen large institutional bets. Bill Ackman initiated a $1.28 billion position in Q2, while Chase Coleman increased Tiger Global’s stake by 62%. Insider transactions, viewable here, show consistent executive share sales, though offset by institutional accumulation.
Alphabet insiders have also sold shares into strength, but large-scale buybacks north of $70 billion annually have provided support. GOOGL’s insider activity can be tracked here.
Valuation Metrics
Amazon trades at 31.8x forward earnings, with expected EPS of $6.73 in FY25. Analysts target $268–$280, implying 16–18% upside. Alphabet trades cheaper at 25.4x forward earnings, with FY25 EPS estimates near $9.20, giving it a PEG ratio advantage. Analysts see GOOGL climbing toward $270–$275, a 15–18% upside.
While both carry AI-driven optionality, Alphabet’s lower multiple reflects stronger near-term profitability, while Amazon’s valuation is supported by its AWS and Kuiper optionality, which could reprice higher if AWS growth accelerates to 20%+ next year.
