Amazon and Alphabet are making their cloud businesses more profitable while heavy AI infrastructure spending weighs on cash flow, and their stocks trade at similar valuations: 23.64 times forward earnings for Amazon and 22.83 for Alphabet, per Yahoo Finance. AWS posted $42.2 billion in second-quarter sales, up 37%, with operating income rising to $16.6 billion from $10.2 billion, though it accounts for only 21% of sales. Google Cloud revenue jumped 82% to $24.8 billion and its operating income rose from $2.8 billion to $8.8 billion, giving investors reason to reassess the gap with AWS. Beyond cloud, Amazon's North American retail operating income reached $9.1 billion and advertising grew 26%, while Alphabet's Search and other revenue rose 17% to $63.3 billion and consolidated operating income climbed 30% to $40.8 billion. The core question is which company earns more from the money it invests.
Summary written by Upside AI from the original article. Read the source for full details.
Original headline: Amazon vs. Alphabet: Is GOOGL’s Cloud Growth Being Undervalued?
Read the original on Yahoo Finance ↗
Keywords
AmazonGOOGLcloud computingvaluation
Open a keyword to see other news on the same topic.
Related tickers and likely impact
GOOGL
▲ Likely positiveAlphabet Inc. (Class A)
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Communication Services |
| Industry | Interactive Media & Services |
| Market cap | $4.3T |
| Close on 10/20/2026 | 340.24 |
| Change that session | -1.14% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- 3 Cash Flow Stocks To Watch In October 2026
US inflation reached 3.7% in September, driven by energy costs, which makes reliable cash generation more important for investors. The article covers three stocks screening as attractively priced on future cash flows, out of 92 additional companies the screen surfaced. Alphabet generates about $367.1 billion from Google Services and $77.6 billion from Google Cloud, where AI infrastructure and Vertex AI turn enterprise usage into recurring cash flows. Amazon's North America segment brings in about $453.7 billion and AWS $148.4 billion, with AWS growth reaccelerating to roughly 20% through 2025. The article notes that both companies' cash engines face a major AI infrastructure spending cycle that could reshape future margins.
- Amazon (AMZN) Trades at 24 Times Forward Earnings. Can Its Cash Engines Fund the Robotaxi Bet?
Amazon (AMZN) trades at about 24 times forward earnings, and investors are asking whether its cloud and retail businesses can fund the robotaxi bet through Zoox. Regulators approved Zoox to charge for rides, a commercial milestone, but that does not yet prove profitable operations. Second-quarter sales rose 20% to $200.6 billion and operating income rose 43% to $27.5 billion, with AWS revenue up 37% to $42.2 billion and operating income of $16.6 billion. Free cash flow was negative $7.6 billion over the twelve months ended June 30 as property and equipment spending grew, which Amazon mainly attributed to AI investment. The forward P/E is 23.64 versus a 15.40 median for the consumer-discretionary sector, and second-quarter non-operating pre-tax income of $53.4 billion came mostly from Anthropic investments, while hedge fund holders rose to 369 from 353.
- Prediction : Amazon Next Chapter Could Be Its Most Important One Yet
24/7 Wall St. sets a price target of $332.67 for Amazon (AMZN), 30.4% above the current $255.20, and rates the stock a buy with 70% confidence. The thesis rests on AWS, which grew 37% last quarter, its fastest pace in 18 quarters, while Amazon plans to spend about $200B in 2026 on AI infrastructure, chips, robotics and satellites. The article flags risks: trailing free cash flow turned negative at about -$7.6B after second-quarter capex rose 68.44%, and long-term debt climbed to $119.1B from $65.6B. It compares Amazon's valuation with Microsoft and Alphabet, and says the author would stay constructive if AWS growth stays above 30% and free cash flow turns positive in 2027.
- Alphabet Stock And 2 More Undervalued Stocks To Watch
Oil prices hit a five-month high after attacks on Middle East infrastructure, and the article highlights three undervalued stocks flagged by a cash flow screen. Mueller Water Products, valued at about US$3.4b, makes valves, hydrants and metering systems, with Water Flow Solutions generating about US$824 million of sales and Water Management Solutions about US$655 million. Wintrust Financial, a Midwest community banking, specialty finance and wealth group valued at about US$9.6b, earns recurring income from Community Banking, which contributes about US$2.1b of revenue. Alphabet, valued at about US$4,145.1b, leans on Google Cloud, which contributes about US$77.6b, turned operating profitable as of 2023, and ranks #3 globally behind AWS and Azure with over 11% market share. The full screen surfaced 99 more businesses not covered here.
- Alphabet Offers the Most Compelling Blend of Asymmetric AI Upside and Safety Across the Magnificent 7
The author argues that Alphabet offers the best mix of AI upside and safety among the Magnificent 7, citing 950 million monthly active users for the Gemini app and Google Cloud revenue of $24.77 billion, up 82% year over year. Second-quarter revenue reached $119.80 billion, up 24.2%, with operating margin widening to 34%. The author considers the P/E of 15 generous because a $99.03 billion unrealized equity gain inflated recent net income, though the balance sheet is strong. The main risk named is spending: 2026 capex guidance of $175 billion to $185 billion pushed second-quarter free cash flow to negative $5.86 billion, long-term debt rose from $46.5 billion to $98.2 billion, and buybacks were suspended. The author says investors should watch whether Cloud growth and earnings consistency keep pace with the capex expansion.
- Microsoft vs. Alphabet: Is GOOGL’s Cloud Growth Worth More Than Investors Think?
Microsoft (MSFT) and Alphabet (GOOGL) trade at forward P/E ratios of 25.13 and 22.83, respectively. Google Cloud revenue jumped 82% to $24.8 billion in the second quarter, with operating income rising from $2.8 billion to $8.8 billion, while Azure and other cloud services grew 43%. Both companies face heavy infrastructure spending: Microsoft spent $35.8 billion on property and equipment, pushing its cloud gross margin down to 65%, while Alphabet spent $44.9 billion, leaving roughly negative $5.85 billion in quarterly free cash flow. The article argues Alphabet's $9.11 EPS is unreliable because about $98 billion came from net other income, so its 30% operating-income growth better reflects underlying performance. Microsoft has a more diversified earnings base and higher consolidated operating margins, but the key question is whether either company can turn AI demand into cash after paying for infrastructure.
Related markets
Latest news
- Trump to throw spotlight on overseas crypto abuses at White House event
President Donald Trump is set to highlight his administration's efforts to pursue overseas crypto criminals at a White House cybercrime event on Wednesday, according to an official. U.S. law enforcement has halted about $833 million in crypto tied to overseas scams, and 503 fraudulent crypto websites have been seized under the Homeland Security Task Force. Authorities have also informed almost 9,000 U.S. citizens that they are being victimized. The transnational criminal organizations behind these scams have stolen tens of billions of dollars from Americans, and the Treasury formed a multi-agency Scam Center Strike Force in November. Meanwhile, Trump's personal crypto ties may have become a political liability as the midterm elections approach in a couple of weeks.
- AI is building out the new Industrial Revolution: Nvidia's Jensen Huang
Nvidia CEO Jensen Huang delivered a keynote at the GTC Berlin event, where he emphasized that AI is helping build the new Industrial Revolution. He noted that AI is becoming increasingly integrated into manufacturing processes.
- Musk's SpaceX-Tesla Merger Would Create a Bitcoin Treasury Behemoth
Elon Musk said the boards of SpaceX and Tesla have formed special committees of independent directors to weigh a merger, while cautioning that a deal is not a certainty. Combined, the two would hold 30,221 BTC, worth roughly $2.5 billion at a Bitcoin price near $83,000, making it one of the largest non-mining corporate Bitcoin treasuries. Tesla reported 11,509 BTC in its latest quarterly filing, while SpaceX disclosed 18,712 BTC in its S-1 ahead of its June IPO, a stash largely invisible to public markets and more than double previous blockchain-tracker estimates. The combined cost basis is around $1 billion, implying an average buy price near $35,000 per coin. A merger would not change Bitcoin itself but would alter governance and accounting, placing the holdings in one public company subject to quarterly disclosures; neither company has signaled plans to buy or sell.
- Musk's SpaceX-Tesla Merger Would Create a Bitcoin Treasury Behemoth
Elon Musk said the boards of SpaceX and Tesla have formed special committees of independent directors to weigh a merger, while cautioning that a deal is not a certainty. Combined, the two would hold 30,221 BTC, worth roughly $2.5 billion at a Bitcoin price near $83,000, making it one of the largest non-mining corporate Bitcoin treasuries. Tesla reported 11,509 BTC in its latest quarterly filing, while SpaceX disclosed 18,712 BTC in its S-1 ahead of its June IPO, a stash largely invisible to public markets and more than double previous blockchain-tracker estimates. The combined cost basis is around $1 billion, implying an average buy price near $35,000 per coin. A merger would not change Bitcoin itself but would alter governance and accounting, placing the holdings in one public company subject to quarterly disclosures; neither company has signaled plans to buy or sell.
- Chainlink, Cardano, other blockchain groups push SEC for clearer crypto rules
Six major blockchain organizations, including Chainlink Labs, Cardano Foundation, Hedera, Aptos Labs, Ava Labs and Stellar Development Foundation, urged the SEC in a joint letter dated Oct. 20 to formally classify digital commodities as non-securities. They argued that interpretive guidance alone leaves legal uncertainty, and that this classification should be written directly into the proposed Regulation Crypto Assets framework. The letter also asks for clarity on how securities laws apply to secondary-market transactions, as well as on staking and other activities tied to decentralized blockchain networks. The SEC's proposal, introduced in August, drew roughly 140 public comments over 60 days, and the consultation closed on Tuesday.
- Government to submit new resolution on wage policy to Central Committee
Deputy Prime Minister Phạm Thị Thanh Trà said during a group discussion on the afternoon of Oct. 21 on laws covering labor, employment and social insurance that the Government is drafting a proposal to report to the Political Bureau. The proposal is expected to go to the Central Committee at its Fifth Plenum to issue a new resolution on wage and social insurance policy, replacing Resolutions No. 27-NQ/TW and No. 28-NQ/TW. According to the Deputy Prime Minister, the current amendment to the Social Insurance Law mainly addresses immediate issues such as expanding coverage, while a more fundamental and comprehensive revision will follow the new resolution. For the Employment Law, the focus is cutting unnecessary licenses and reviewing rules on labor leasing, though simplifying procedures does not mean loosening management. Lawmakers also raised rules on depositing funds in joint-stock commercial banks with state capital, and the Government aims for safety, sustainability and timely payment of benefits.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.