Like Amazon (AMZN), Chinese internet giant Alibaba (BABA) is now involved in an ever-expanding range of businesses, from e-commerce and payment processing to cloud computing and entertainment. But how do these two tech titans stack up in terms of market cap, revenue, earnings growth and profit margins? And are both stocks poised to keep climbing?
While both companies remain dominant leaders in the e-commerce space where they began, Amazon is now a clear leader in cloud computing through Amazon Web Services (AWS), which generated $5.4 billion in revenue in Q1. By comparison, Alibaba’s cloud computing revenue rose 103% in its most recently reported quarter to $699 million.
As Amazon has also ventured into voice-control technology through Alexa, the grocery business with its purchase of Whole Foods Market and hardware with devices such as Amazon Fire tablets and Fire TV stocks, Alibaba also continues to expand.
Last year, Alibaba took a 33% stake in Ant Financial to increase user acquisition and retention in collaboration with its Alipay digital wallet.
Amazon Prime Vs. Alibaba’s 88 Membership
Amazon Prime has proved to be a distinct competitive advantage for Amazon, keeping customers inside Amazon’s ecosystem. For a recently raised price of $119 per year, Prime members get free shipping, free movie streaming, free music, free online storage and more. Last month, Jeff Bezos revealed that there are now over 100 million Prime members.
Last August, Alibaba announced 88 Membership, its own new loyalty program. The new program consolidates similar clubs previously offered by Alibaba-owned Tmall and Taobao Marketplace. Alibaba has not announced membership numbers.
Amazon and Alibaba have both moved aggressively into the entertainment business. Alibaba creates movies, TV shows and other entertainment content through its subsidiary, Alibaba Pictures Group.
As Amazon’s rivalry with fellow FANG stock Netflix (NFLX) has intensified, Amazon has increased its spending on original content. MediaPost has reported that Amazon is expected to spend approximately $5 billion this year on original content. Netflix is seen investing $8 billion in its movies and TV shows.
Amazon Vs. Alibaba: By The Numbers
As the table below shows, Amazon’s annual revenue of $177.9 billion dwarfs Alibaba’s $39.9 billion. But the Chinese internet giant’s 48.9% annual pretax profit margin is nearly 24 times larger than Amazon’s 2.1%.
Alibaba also tops Amazon in terms of average sales growth over the last three years, with 45% growth vs. Amazon’s 27%. But Amazon’s 92% average earnings growth rate over the last three years beats Alibaba’s 31% pace. Of course, for companies of their size such sales and EPS rates are impressive.
|Market Cap||$506.6 billion||$770.2 billion|
|Annual Revenue*||$39.9 billion||$177.9 billion|
|EPS Growth Last Quarter||44%||121%|
|Avg. Annual EPS Growth Last 3 Years||31%||92%|
|Avg. Annual Sales Growth Last 3 Years||45%||27%|
|Annual Pretax Profit Margin||48.9%||2.1%|
|Return on Equity||31.1%||9.6%|
*Annual revenue for latest reported calendar or fiscal year.
Amazon Vs. Alibaba: Testing New Buy Zones
Amazon and Alibaba are both testing new buy zones. But also keep in mind that both consolidations are later-stage bases, which involve more risk.
Alibaba, which is on the IBD 50 list of top growth stocks, closed Tuesday’s session at 198.11, just below a 201.60 entry in a double bottom base. The stock sports a solid A- Accumulation/Distribution Rating, a 1.5 up/down volume ratio and eight quarters of rising fund ownership. With the highest-possible 99 Composite Rating, Alibaba edges out Amazon for the No. 1 ranking in the No. 12-ranked internet retailers industry group.
Amazon, which is on IBD Leaderboard, is trading 1% above a 1568.62 buy point. The stock has a B- Accumulation/Distribution Rating and 1.2 up/down volume ratio.
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