Amazon vs. Costco: Which Stock Is a Better Buy?

Shares of e-commerce person Amazon (NASDAQ: AMZN) and warehouse nine Costco Wholesale (NASDAQ: COST) person some created important wealthiness for shareholders implicit the agelong haul. But they are entering 2026 with precise antithetic valuation multiples -- and precise antithetic underlying concern maturation too. Surprisingly, however, the banal with the cheaper valuation is the 1 with meaningfully faster gross growth.

Further, this is simply a peculiarly absorbing clip to comparison the 2 stocks, arsenic their year-to-date returns person diverged. Amazon banal has pulled backmost astir 14% implicit the past period arsenic investors digest a monolithic caller superior spending plan. Costco stock, meanwhile, has soared 17% twelvemonth to day arsenic investors admit the durable and predictable quality of its underlying concern amid uncertainty, driven by fears astir the costs and disruptive quality of AI (artificial intelligence).

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So, with the 2 stocks moving successful other directions recently, which is the amended buy?

Amazon's fourth-quarter results, announced connected Feb. 5, showed a concern with superior momentum. Total nett income during the play roseate 14% twelvemonth implicit twelvemonth to $213.4 billion, accelerating from 13% maturation successful the anterior quarter.

Underneath the surface, however, Amazon's growth-driving unreality computing business, Amazon Web Services (AWS), saw an adjacent much important acceleration than its consolidated business. Revenue successful the unreality conception roseate 24% twelvemonth implicit twelvemonth to $35.6 billion. That gait edged up from the erstwhile quarter, signaling that the optimization headwinds (when companies scrutinize their unreality spending to get much bang for their buck) of the past 2 years person abated.

Additionally, Amazon's fourth-quarter operating income roseate from $21.2 cardinal successful the year-ago play to $25 cardinal this quarter.

Looking ahead, however, Amazon's operating income volition apt beryllium challenged successful the adjacent term, arsenic absorption is readying a large concern cycle.

Specifically, Amazon expects to put astir $200 cardinal successful superior expenditures successful 2026 -- up sharply from the $131.8 cardinal it spent successful 2025. This comes arsenic the AI roar is causing a surge successful request for unreality computing.

"Customers truly privation AWS for halfway and AI workloads," said Amazon CEO Andy Jassy during the company's fourth-quarter net call. "And we are monetizing capableness arsenic accelerated arsenic we tin instal it."