Alibaba (BABA) vs. Amazon (AMZN): Which E-Commerce Stock Has More Upside Ahead of Q2 Earnings?
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Alibaba (NYSE:BABA) Stock
Alibaba is China's largest e-commerce and cloud services company, operating platforms like Taobao, Tmall, and AliCloud. The stock has climbed over 39% so far this year, driven by strong gains in its AI-powered cloud services and growing demand for instant delivery. The company is doubling down on artificial intelligence, aiming to use it to transform online shopping and cloud services. It is using AI across its apps and cloud platform to improve customer experience and stay ahead of the competition.
Looking ahead, the company is set to report its Q1 FY26 earnings next month. Wall Street expects Alibaba to report earnings of $2.22 per share for Q1, down 3% from the year-ago quarter. The decline could be due to the company's heavy investment in logistics and delivery. Meanwhile, analysts project Q1 revenues at $35.46 billion, up 6% year-over-year.
Is Alibaba Stock a Good Buy Right Now?
Ahead of the Q1 results, Benchmark's Top analyst Fawne Jiang reiterated her Buy rating with a $176 price target, implying a 47% gain from current levels. The analyst sees recent share weakness as a 'buying opportunity' and encourages investors to 'build exposure on dips,' confident in Alibaba's strong long-term growth outlook.
Nevertheless, she expects Alibaba's margins and profits to come under pressure in the near term due to increased spending. As a result, Benchmark has cut its EBITDA forecast to RMB44 billion for Q1 FY26 and RMB208 billion for the full FY26, 'reflecting near-term margin pressure.'
Overall, Wall Street has a Strong Buy consensus rating on Alibaba stock based on 14 Buys and one Hold rating. The average Alibaba price target of $151.08 implies about 26% upside potential from current levels.
Amazon (NASDAQ:AMZN) Stock
E-commerce and cloud computing giant Amazon is proving the resilience of its business model despite macro challenges and tariff woes. The stock has climbed over 5% so far this year. Several analysts remain bullish on Amazon's high-margin cloud unit, Amazon Web Services (AWS), which is expected to benefit from growing AI demand. In Q1 2025, AWS accounted for just 19% of revenue but delivered an impressive 63% of total operating profit. Meanwhile, Amazon's fast-expanding advertising segment is also emerging as a key growth engine.
Looking ahead, Amazon is scheduled to announce its second-quarter results on July 31. Wall Street projects a 9% growth in Amazon's revenue to $162 million. Meanwhile, analysts expect the company to report earnings per share of $1.32 compared to $1.26 in the prior-year quarter.
Is Amazon a Buy, Hold, or Sell?
Ahead of the Q2 print, BofA Securities analyst Justin Post raised his price target to $265, up from $248, while maintaining a Buy rating. Post expects Amazon's Q2 retail performance to be strong, helped by positive credit card spending data and an extended Prime Day. He also believes AWS is picking up pace, with a strong order backlog and rising cloud demand. The analyst now predicts Q2 revenue of $164 billion, above Wall Street's estimate of $162.1 billion.
Turning to Wall Street, AMZN stock has a Strong Buy consensus rating based on 44 Buys and one Hold assigned in the last three months. At $258.27, the average Amazon stock price target implies an 11.59% upside potential.
Conclusion
Ahead of earnings, Wall Street remains bullish on both Alibaba and Amazon stocks. However, analysts see greater upside potential in Alibaba, supported by its strong fundamentals, expanding AI initiatives, and solid recovery in e-commerce business.
Meanwhile, Amazon is gaining from steady growth in cloud and advertising, two high-margin areas set to benefit from AI. While its upside may be smaller than Alibaba's, Amazon's stable growth and strong cash flow continue to earn Wall Street's confidence.
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