Lawrence Nga, The Motley Fool

Thu, Jun 12, 2025, 5:07 PM5 min read

• The tech giants have plenty in common.

• Yet, they differ in other aspects like business model and prospects.

• One of them is clearly cheaper, but for good reasons.

• 10 stocks we like better than Amazon ›

Amazon (NASDAQ: AMZN) and Alibaba (NYSE: BABA) are giants in the global tech landscape, both with prospects of continuing to extend their dominance into the future.

Both companies share similarities, yet they are very different in many ways. But which of the two is a better stock to own in the next few years? Let's explore this further.

At first glance, Amazon and Alibaba seem like companies separated by more than just geography. One dominates the U.S. and many parts of the Western world, while the other commands China's domestic market. But look a little closer, and you'll find that the two tech titans have more in common than not.

Both companies built their vast empires on e-commerce, but have expanded into new sectors over time. Amazon began by selling books online, but has expanded into other categories and profitable businesses, including cloud computing, advertising, logistics, and media.

Alibaba, on the other hand, began its business as a cross-border e-commerce platform, enabling overseas merchants to tap into China's vast supply chain. It was only in the later stage that it launched its flagship Taobao marketplace, followed by Tmall. Its success in e-commerce propelled the giant into new businesses, including fintech, cloud computing, logistics, entertainment, and more.

As both companies expanded into new sectors, they have gradually diversified their revenue base, making it more resilient to the changes in the external environment. Moreover, this diversified business model opens new opportunities to allocate capital to high-growth areas. For instance, both companies have been investing heavily in artificial intelligence (AI) and cloud computing to capitalize on the once-in-a-lifetime shift trend.

While these companies have very different cultural roots, they do share similarities in values such as customer delight, innovation, and investing in emerging technologies and businesses, as well as long-term thinking. This DNA stems from the significant effect of their founders, Jeff Bezos and Jack Ma. Both left a strong legacy, even though they have stepped down from active management of their businesses.

In short, both giants are well-positioned to sustain and grow their businesses, using their solid business models and long-term cultures.

While Amazon and Alibaba are leaders in their respective e-commerce markets, their business models diverge significantly. Amazon operates a first-party retail business -- buying and selling inventory -- alongside its third-party marketplace. Alibaba, in contrast, is a pure platform. It connects buyers and sellers without holding inventory.