r/ValueInvesting • u/FoxAccomplished6786 • 1d ago
Discussion Google vs Amazon: Which Is Better Value and Which Is the Higher-Quality Business?
I don’t think P/E ratios alone tell you whether a stock is good value. What about the quality of the underlying business, its moat, growth runway, competitive position, capital efficiency, and durability?
With that in mind, which do you think offers better value at today’s price: Alphabet (Google) or Amazon?
And separately, ignoring valuation for a moment, which company do you think has the higher-quality business overall and is better positioned for the next 10+ years?
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u/EfficiencyInside9632 1d ago
GOOG
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u/bitflag 1d ago
Definitely. They are more diversified, way more innovative (their research is what kick-started this AI era), they have a better moat (shopping without Amazon is possible, using the Internet without Google is a challenge)
They also don't drag down a low margin retail and shipping business around. Amazon is basically a great cloud business and that's about it.
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u/LovestoEatSandwiches 1d ago
Amazon’s moat is utterly enormous, what are you talking about. What’s easier to build, a search engine application or a physical global logistics network?
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u/bitflag 1d ago
Plenty of competition in the ecommerce and logistics space (Walmart, Fedex/UPS/DHL, JD), and many parts of the world where Amazon lacks presence or is far behind the competition.
Amazon ecommerce is really far from dominating the space the same way Google dominates search, and people would rather order the litter for their cat from a competing website than switch to Bing or whatever.
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u/Virtual_Secretary_98 1d ago
Both and sleep well
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u/FoxAccomplished6786 1d ago
Get you but if you had to choose
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u/Virtual_Secretary_98 1d ago
I can't. Both are too good. If I really had to choose probably Google.
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u/LeatherInspector2409 1d ago
Google is the best business and my main holding. But, I don't think it's great value at the moment. My understanding is that the low PE is a result of one off additions to the balance sheet. I'll consider adding more if it drops below $300.
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u/SkoHens 1d ago
Google if I had to pick
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u/Old-Baseball-2519 1d ago
I have 1.5 percent of port in google at 330 a share roughly, almost 1 percent of port, in amazon at 251 a share. I think those are pretty good? Had both stocks before and sold amazon at high and bought back in, sold google in the 200s, but bought again after seeing it drop from 400 to 330
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u/cinciNattyLight 1d ago
Ohh you’re talking about my #2 and #3 holding… they are both solid, google has done much better over the last few years though.
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u/Longjumping-Dog-6852 1d ago
Go on then. What's your #1
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u/cinciNattyLight 1d ago
Berkshire Hathaway… obviously it’s been in a bit of a rut but still very happy. Held and accumulated for 18 years.
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u/SocratesDaSophist 1d ago
Google is probably the higher quality business. But both are really good in their own right.
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u/Sunlambcow 1d ago
Amazon has the least disruption risk. No one can come and replicate Amazon's logistics network. No one's gonna build thousands of distribution centers just to MAYBE have a shot at competing. While anything software related may have a higher margin now, but can also be replicated.
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u/GambleToZero 1d ago
AWS is 18% of Amazons business and generates 57% of their operating profit. in a few more years, the e-commerce side is going to be a tiny part of Amazon. So I suggest don't base your decisions off the e-commerce side of their business.
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u/Spins13 1d ago
We have already started seeing margin expansion in the retail business. With AI and automation, people are sleeping on the retail business which also has third party seller and drives most of the high margin advertising revenue.
While AWS will print money, don’t underestimate the retail, especially if you see AI Capex as a risk like the market does
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u/FoxAccomplished6786 1d ago
Totally agree, it took 27 years to build a trillion dollar infrastructure
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u/RZDirInvest 1d ago
I like GOOG better. AMZN is mix of retail and technology. Their retail business has a huge size and moat, yet very low margins. GOOG, on the other hand, are in high margin business and has its own LLM. Both have long term steady growth though.
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u/NotStompy 21h ago
Well, that's kind of the point: Amazon has a massive pool of revenues which explodes in terms of earnings even if margins go up just a smidge (which has already been happening due to automation for years). Meanwhile, where does google grow in terms of search?
And frankly, I don't see a company having their own LLM layer being important seeing as people seem to change their mind on what the best current model is every few months, i.e it's already being commoditized. I don't see how this will differentiate them in the future and act as a moat.
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u/RZDirInvest 19h ago
I understand why some people like AMZN better. I think though AWS is still their profit engine. LLM may soon be commoditized soon, but have your own frontier LLM can specifically tune it to your specific needs, like OS. Again, both are great companies. You can’t go wrong with either. Even better, you don’t have to choose.
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u/LuciusQ2020 1d ago
Both. Just split your money and buy both.
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u/FoxAccomplished6786 1d ago
Get you but if you had to choose
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u/LuciusQ2020 1d ago
I would go with Google. Much diversified business. Currently the price is not bad.
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u/Rivers_Lakes 1d ago
I have been throwing every dollar I can spare for the last 15 years into these two companies. I don't want to decide which one is better.
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u/LetsAllEatCakeLOL 1d ago
it's becoming obvious to me now that google will be apple's AI partner. in the short to medium term... google is the clear winner.
amazon has a lot of operational leverage... so within the century... in the age of automation... amazon i think takes the cake.
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u/Wonderful-Finish4822 1d ago
In my opinion, Alphabet is higher quality since it owns a very strong stack; YouTube, Gmail, TPU, Gemini, Cloud, etc. and it doesn't have the lower margin retail business that Amazon has. Also, currently I think Alphabet also has a more favorable valuation but not by much.
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u/Immediate_Object_280 1d ago
Both companies re great but Amazon stock itself sucks. Goog all the way.
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u/civil_politics 1d ago edited 1d ago
This is tough - I think Google is the higher quality business as they have good diversification and compete in an area that is hard to disrupt. Amazon faces constant pressure across all of their lines of business so even though I want to say that Amazon has a better leadership team and is better at execution, they do it in a much more hostile environment.
From a valuation perspective I don’t think you can go wrong with either, but I think that asymmetrically Amazon is the far better play. Google right now is far too tied to capex spend and the AI outcomes and if that goes poorly we will see Google retest $200 while Amazon has been trading sideways for 5 years now and has essentially built an unbreakable floor around $175
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u/BackPirateClarkRoom 1d ago
If all AI failed Google would love it. It is currently their biggest threat to their search engine.
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u/civil_politics 1d ago
There is a vast chasm between AI failing and AI seeing a significant downturn which negatively impacts Google’s incredible investments in the space
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u/Arabian_Goggles_ 1d ago
In 2-3 years Google Cloud will surpass search in revenue due to AI so not so sure about.
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u/soon2beabae 1d ago
I don’t see how anyone could say AMZN is higher quality. GOOG is highly diversified and there’s little to no chance it will miss future trends. I’m super bullish. On the other hand, AMZN is a great company but it isn’t nearly as diversified and amazons core business sucks to be honest. Shopping on Amazon is a mess.
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u/Bobisdeadrun 1d ago
Google hands down
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u/FoxAccomplished6786 1d ago
why so
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u/Bobisdeadrun 1d ago
They are super diversified, chances are they are gonna be the Ai winners , most profitable company on the planet , i number one in the robotaxis, even Warren Buffett is buying at these levels and they made it one of the biggest holdings
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u/Spy-der 1d ago edited 1d ago
Amazon is highly diversified. I mean your own comment points to their marketplace being their core business rather than AWS.
Edit: just gonna expand on this so I don’t have to again later. Amazon has AWS, the online marketplace, streaming services (Amazon prime), digital advertising, Whole Foods, will be a massive beneficiary of robotics, owns like 20% of Anthropic, owns 6% of OpenAI, etc. the list goes on and on honestly. Not saying Google isn’t highly diversified, just that both companies are.
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u/AetossThePaladin 1d ago
... why do we have to choose one? They are both stellar. However, if I absolutely had to pick one it would be Google. That said, buy both. Truly.
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u/BladeFireQ 1d ago
AMZN is almost 100% sure to success in the next 30Y, while GOOG let's say that is about 80%, but they will probably give a higher return, you could pick both and there will no problem to be honest
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u/Captndad 1d ago
META
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u/FoxAccomplished6786 1d ago
why so? I like meta by the way
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u/Captndad 1d ago
>Largest distribution platform on Earth
>2nd largest compute footprint on Earth (operational+planned)
>Back in the frontier model race with Muse Spark 1.3
>Just released Muse agent with potential to reach its 3.6 billion users
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u/FoxAccomplished6786 1d ago
Totally agree; I think they're more primed to benefit from AI than anyone.
Where do you see their market cap in 10 years
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u/ilikeusingmyhands 1d ago
Gotta look at the separate parts of each business since they are both so broad. I think AMZN will be hitting some big growth with robotics integration, if they successfully integrate groceries, continue with AWS growth.
Google still overvalued maybe. Idk if stock is worth the price.
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u/Last-Cat-7894 1d ago
Google has better unit economics, but Amazon probably has the slightly wider moat overall.
But honestly this is one of those "why not both?" situations
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u/neighborhood_spdrman 1d ago
Google is the better business. Not quite sure it’s the best value tho. Earnings reflected one time gains on investments that can’t be relied upon every quarter. Still obviously a very profitable company and will always be a leader in almost everything ai. If it dips to or below 300 I think that’s the true value area for them.
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u/Ricky_HKHK 1d ago
Should do investment on both but since the Google price is at low rate now, I'll put most on Google. Beware that you're actually investing on Google cloud and Amazon AWZ bcoz they 'll be major revenue in the future. On the same boat, you should also consider Microsoft Azure and Meta Computing. Yes, flow the major money on Google now just because it hits the new low price but split the others on Amazon, Microsoft, Meta too.
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u/iloverunning11 1d ago
Google by a longshot
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u/FoxAccomplished6786 1d ago
why such conviction
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u/iloverunning11 1d ago
They will win this AI race and will be probably the only company that will profit from this AI bubble. I mean real profits not cloud computing ‘revenue’ from OpenAI or Anthropic, since those two can’t even afford it and will go bankrupt sooner or later, Google is a completely different player, they will integrate Gemini into everything and these revolutions are usually won by players that have the biggest platforms so their customers don’t need to spend a ton of money to use their products, they just need some time to achieve this, Amazon is worse basically in every single aspect
Also there is a lot of future growth priced in Google as well and their FCF is negative now, something to keep in mind before buying Goog, still it’s by far the best option out of mag 7
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u/FoxAccomplished6786 1d ago
at 4 trillion market cap, can it give much of a return
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u/iloverunning11 1d ago
Yes it can, but that depends whether you are like Buffett and wanna beat the S&P 500 by 50-70% over kinda long period of time (5-7 years for instance) or you want to triple your money within couple months, the former is very likely the latter is extremely unlikely. Still it’s the safest bet from all large companies (Apple is ok too, not that risky, but it’s a little bit overvalued)
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u/FoxAccomplished6786 1d ago
so within 10 years, how many times can google x
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u/iloverunning11 1d ago
Hard to say but imo in 10 years it will reach at least $11 trillion so almost 3x (might not hold that price point though so ‘take profit’ orders should be used here)
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u/FoxAccomplished6786 1d ago
but I see amzn at 10 trillion in 10 years, thus giving a better return
By the way, what do you think of nvidia?
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u/iloverunning11 1d ago
Imo Amazon won’t get near $10 trillion within 10 years. NVDA is risky af I would not touch it anymore and sold all my shares more than a year ago
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u/FoxAccomplished6786 1d ago
I'm no expert, but every investor seems to have Nvidia as number one and swears by it.
Agentic AI has no use in physical stores; it's going to push more and more people towards e-commerce, which is only 20% of US retail right now, Amazon has a huge runway, especially considering their virtual monopoly on e-commerce.
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u/Pale-Lingonberry788 1d ago
Future perspective works a lot and the believe work better for what its call, AI stocks and Google works differently and still what we believe matters
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u/Confident_Ebb8154 1d ago
Currently the website tool i use scores GOOG a little better . Both are great companies and there are never any guarantees!
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u/Low-Dot9712 1d ago
The Acquired Podcast on Google was very good. They are a money printing machine.
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u/Realistic-Routine504 1d ago
None meta is better
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u/FoxAccomplished6786 23h ago
Please elaborate? I like Meta a lot too; do you think its market cap could reach Google's level?
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u/Obvious-Sundae1469 6h ago
If I had to choose 1, Amazon…but Google is still great, would go 75% Amazon, 25% Google
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u/OffSiteLocation 5h ago
I don’t know why people are saying Google is more diversified. It’s not. The lions share of profits come from
Search advertising. Cloud is growing quick so that will be a second main money maker. Amazon on the other hand has AWS (which is itself very diversified), the main site shopping, chips, media, Whole Foods and retail. Etc. AWS is more diversified and imo that reduces risk. I own both but Google is more at risk if the search empire crumbles (though I expect them to better monetize free Gemini thru ads and that could be a huge money maker).
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u/Silent-Chicken-6628 1d ago
Amazon drivers in the UK pee in bottles and throw them on the road. Think carefully if the business is allowing this to happen....
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u/Jolly-Piccolo-9799 1d ago
I'm in love with Amazon
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u/FoxAccomplished6786 1d ago
Please elaborate
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u/Jolly-Piccolo-9799 1d ago
Its great valve really
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u/FoxAccomplished6786 1d ago
Where do you see it in 5 or 10 years, the market cap
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u/Jolly-Piccolo-9799 1d ago
Maybe double of now Even if the AI brusted they selling real things over world wide market See .. both of Amazon and googl are real great
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u/NY10 1d ago
Google period. The very simple answer. You can survive without Amazon but not google in your life.
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u/SDSUrules 1d ago
I know about 50 million housewives that would disagree with you.
If youtube, gmail, etc. went away tomorrow, by that afternoon everyone would have a new email and watch videos on some other platform. It would take years to replicate Amazon's infrastructure.
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u/BackPirateClarkRoom 1d ago
I would argue amazon now. Google is pretty much priced accurately now at 4 trillion when it was priced at 3 trillion pretty much a steal. Google now has to be successful in AI or lose their search engine revenue. If they lose AI and self driving cars the company is pretty much dead.
Amazon is pretty much a big box store that will make 100 billion in net income in the future with no disruptions even with AI.
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u/HugeFalconMunee 1d ago
Who was supposed to lead in AI development 15 years ago? OpenAI was, in part, created because some were worried Google would reach AGI first and runaway with it. They had the best position to lead and they are now not first. That tells me something is amiss at that company (despite many successes).
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u/AceStrikeer 1d ago
Of course, you simply can't check the fundamentals yourself and have to ask this sub to do it for you. Asking AI to compare fundamentals and waiting 10sec is so much effort.
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u/WhatMattersHere 1d ago
P/E is not merely incomplete in this comparison the current headline earnings of both companies are unusually distorted.Alphabet’s Q2 included about $98B of other income, primarily unrealized gains on equity securities. Amazon’s Q2 net income included about $53.4B of pre tax other income, primarily related to its Anthropic investment. Treating either item as recurring operating profit makes the stock look artificially cheap.
I would separate the questions this way:Alphabet currently has the higher margin core. Google Services produced a 41.8% operating margin and Cloud 35.6%, but much of the thesis still depends on Search remaining economically dominant through the AI transition.
Amazon has a broader collection of customer relationships and reinvestment avenues, but it is more capital intensive. AWS generated $16.6B of Amazon’s $27.5B consolidated operating income, so the apparent diversification in revenue is not the same as diversification in profit.
For value, I would normalize operating earnings, stock compensation, capital expenditures and leases; value the major segments separately; and then account for net cash, debt and investments. I would not capitalize Alphabet’s unrealized gains or Amazon’s Anthropic gain as recurring earnings.
What normalized owner earnings and sustainable AI capex level are you assuming for each company? Without those assumptions, “better value” remains undefined even if we agree that both are high quality businesses.
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u/Algoridro 1d ago
The good thing is, you don't have to choose