Alphabet and Amazon Earnings: Which Tech Giant Offers Better Value for Long-Term Investors?

Following the recent release of Q4 earnings reports from major Big Tech players, a fascinating divergence has emerged between two cloud computing powerhouses: Alphabet and Amazon. Both companies dominate the global cloud infrastructure market through Google Cloud and Amazon Web Services (AWS), yet their stock market trajectories over the past year tell dramatically different stories. As investors evaluate their portfolio allocations, the question becomes clear—which of these giants presents a more compelling opportunity moving forward?

Contrasting Growth Trajectories in Cloud Computing

The cloud services sector has become the crown jewel of modern tech infrastructure, and Alphabet and Amazon remain locked in intense competition for supremacy. Google Cloud, operating as the third-largest global cloud provider, has demonstrated remarkable acceleration. Recent earnings projections highlighted Google Cloud generating $16.25 billion in Q4 2024 revenue, representing a robust 36% increase year-over-year from $11.95 billion. This growth surge reflects the successful integration of artificial intelligence capabilities into Alphabet’s cloud offerings, with enterprise clients increasingly demanding AI-enhanced services.

In contrast, Amazon’s AWS—the dominant market leader with the largest share of global cloud infrastructure—has experienced a more measured expansion. AWS revenue reached approximately $35 billion, up 21% from the prior year’s $28.78 billion. While respectable, this growth rate falls short of the explosive momentum seen in Alphabet’s cloud division, signaling that market expectations for AWS have outpaced actual delivery in recent quarters. This divergence hints at a critical market truth: Alphabet has captured investor imagination through AI-driven cloud innovation, while Amazon must contend with loftier baseline expectations for its more mature cloud services arm.

Financial Performance: Alphabet’s AI Momentum Against Amazon’s Valuation Appeal

Zooming out to the broader earnings picture reveals striking asymmetry in investor sentiment and valuation metrics. Alphabet’s Q4 total revenue climbed to $94.7 billion, an impressive 16% uptick from $81.62 billion a year earlier. Earnings per share expanded 20% to $2.58, and notably, Alphabet has now exceeded EPS expectations for 11 consecutive quarters with an average earnings surprise of 18.74% over the last four reports—a testament to consistent execution and market underestimation of its financial prowess.

Amazon’s Q4 top line reached a record $211.56 billion, demonstrating the sheer scale of its business operation and marking a 12% increase. Yet here lies the disconnect: despite commanding higher absolute revenues, Amazon’s EPS grew a modest 6% to $1.98 per share, and though the company has beaten expectations for 12 straight quarters, recent performance has increasingly left investors underwhelmed. The stock has stagnated over the past year, declining 2%, while Alphabet has surged more than 80% in the same period—a $100+ divergence in share price between the two rivals.

The valuation picture complicates matters further. Alphabet trades near $340 per share at 31X forward earnings, while Amazon sits just under $240 trading at 30.7X forward multiples. Historically, Amazon commanded a premium valuation, but this script has flipped. Alphabet’s persistent outperformance—up 230% over three years compared to Amazon’s 130%—has reset market expectations for the search and advertising giant, particularly as its AI initiatives gain commercial traction.

Investment Outlook: Which Deserves Your Capital?

The critical divergence emerges when examining forward earnings growth projections. For fiscal 2026, Alphabet’s EPS is projected to climb a modest 5%, while Amazon’s EPS expansion is expected to accelerate to 10%—suggesting mean reversion may be underway. In fiscal 2025, Alphabet’s earnings are slated to surge over 31% to $10.57 per share, while Amazon’s are forecast to expand nearly 30% to $7.18.

These contrasting trajectories reflect fundamentally different market positions. Alphabet has benefited from a powerful AI narrative and exceptional execution that has captured investor enthusiasm, driving its shares to valuations that may already price in significant future success. Amazon, conversely, has been penalized by cloud services growth disappointments relative to market expectations, creating a potential opportunity for value-oriented investors who believe AWS will reignite growth momentum or alternative business segments will contribute more substantially to earnings expansion.

Zacks Investment Research assigns Alphabet a Rank #3 (Hold) rating following its extended rally, suggesting the risk-reward has become less favorable after such a dramatic outperformance run. Amazon, meanwhile, earns a Zacks Rank #2 (Buy) designation, indicating more upside potential exists if the company can restore investor confidence in its cloud division or demonstrate earnings leverage from operational efficiency gains. For conservative investors seeking stability and proven AI adoption, Alphabet remains compelling. For value hunters betting on mean reversion and operational improvements, Amazon presents the more attractive entry point.