r/valueinvesting
What are your reasons for buying Amazon over Google right now?
Author favors Google over Amazon due to lower valuation, AI cloud margins, and compute hedging, questioning Amazon's retail/AWS reliance.
- Lower valuation and strong hedge against compute oversupply via Gemini and Search.
- Highly integrated cloud with AI-focused contracts yielding better long-term margins.
- Ability to use non-cloud profits to undercut prices and squeeze competitors' market share.
- Over-reliance on retail and AWS profits poses a potential existential threat.
- Vulnerable to Google undercutting prices using non-cloud profits to squeeze market share.
- Perceived as lagging behind Google in the current AI race.
I don’t have an agenda; I hold both stocks and I’m curious about the bull case for Amazon over Google.
From my perspective, Google looks like the stronger play right now. They have a lower valuation and a solid hedge against a potential compute oversupply, as they have Gemini and Search to fall back on which would benefit greatly if compute costs fall. They’re arguably the most fully integrated cloud provider, which should lead to better long-term margins, and a large portion of their cloud contracts are AI-focused rather than just storage which also has higher margins.
Amazon is obviously in a great position, but they seem more reliant on retail and AWS for profits. I view this as a potential existential threat—specifically, I worry that Google’s ability to use its non-cloud profits to undercut prices and pull customers into their ecosystem could squeeze Amazon’s market share. While I acknowledge Amazon’s potential with automation, Google currently feels like the clear leader in the AI race.
Can I hear some contradictory opinions? Why are you choosing Amazon here?
Have both. Buy Google in volume a year ago, buy Microsoft and Amazon now.
I thought Microsoft would bounce today; I guess I'll buy more tomorrow if it's still down.
What possibly led you to believe it would bounce today? Thinking the stock goes will go up on any random day is like thinking a football team favored by 2.5 points will win the game. You don’t know what will happen. Over time though, more winning days than losing days. Stop trying to guess what a stock will do in a particular day or week lol, that’s pointless.
AWS is an absolute behemoth. There's a reason why even taking a single percent of the market share is such a big deal in the cloud world, and guess who owns a majority of that already?
I still prefer Google over Amazon, but AWS is not to be taken lightly.
My reason is that Amazon are AI benefit in 4 ways and it’s not yet priced in.
- AWS as any cloud provider is gonna see growth from AI
- they are making their own chips and are considering selling them.
I’m necessarily saying that Amazon is a better business than Google. But the market already fully understand Google, the market doesn’t fully understand Amazon yet.
The robotics programme they have in place is also going to mean a serious reduction in cost too in the future.
I have been doing a lot of digging and Amazon is creating its own chip. Amazon has a lot of room to grow and it’s not even valued at 3T. So I think there is room to run
Amazon has been making Titanium for a while. Same with Googles chip. The only one that’s “new” ish is Microsoft starting to build Maia
I think Amazon is more of a long-term call option at this point. They are investing so much into chips, robotics, leo all the while continuing to build in strength for the core retail. Over the short term, we’re not gonna see results in earnings.
I’m not adding to my positions in either one yet, neither is stupid cheap. Out of the big ones, Microsoft and Meta are much more undervalued
I own both but have a higher concentration in Amazon right now.
They just haven’t run up like Google quite yet.
That’s it. They will run it up.
I think I prefer Google overall but I think people are heavily underrating Amazon here. There is no company in the world that can match Amazon's scope or overall importance. It does 742B in revenue (TTM) which is almost double Google and puts it in a class of its own. Amazon is one of the best setup companies to lead/benefit from the AI boom as it's logistical business is tailor made for physical AI and it is the world's largest cloud provider. If that wasn't enough, Amazon is the #1 investor and partner for Anthropic which is the world's leading LLM.
The knock on Amazon is it doesn't have the same margins tech companies like Microsoft and Google have. However, Amazon margins have been improving as it continues to show success in high-margin areas becoming the 3rd biggest advertiser.
I love goog but don’t own it. Hate bezos but amazon just invested in pre ipo anthropic so there’s that
Doesn't Google own more anthropic than Amazon?
And that's just a Google hedge, Google is better than anthropic. And Google has a million other investments, angles, etc . Waymo, SpaceX/asts, quantum, fission shit... Etc
And they will benefit the most if physical AI becomes a thing.
trash CEOs are the best at producing returns. youll shoot yourself in the foot trying to ethically invest