Shares of e-commerce leader Amazon (NASDAQ: AMZN) and warehouse club Costco Wholesale (NASDAQ: COST) have both created significant wealth for shareholders over the long haul. But they are entering 2026 with very different valuation multiples — and very different underlying business growth too. Surprisingly, however, the stock with the cheaper valuation is the one with meaningfully faster revenue growth.
Further, this is a particularly interesting time to compare the two stocks, as their year-to-date returns have diverged. Amazon stock has pulled back about 14% over the last month as investors digest a massive new capital spending plan. Costco stock, meanwhile, has soared 17% year to date as investors appreciate the durable and predictable nature of its underlying business amid uncertainty, driven by fears about the costs and disruptive nature of AI (artificial intelligence).
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So, with the two stocks moving in opposite directions recently, which is the better buy?
Amazon’s fourth-quarter results, announced on Feb. 5, showed a business with serious momentum. Total net sales during the period rose 14% year over year to $213.4 billion, accelerating from 13% growth in the prior quarter.
Underneath the surface, however, Amazon’s growth-driving cloud computing business, Amazon Web Services (AWS), saw an even more significant acceleration than its consolidated business. Revenue in the cloud segment rose 24% year over year to $35.6 billion. That pace edged up from the previous quarter, signaling that the optimization headwinds (when companies scrutinize their cloud spending to get more bang for their buck) of the last two years have abated.
Additionally, Amazon’s fourth-quarter operating income rose from $21.2 billion in the year-ago period to $25 billion this quarter.
Looking ahead, however, Amazon’s operating income will likely be challenged in the near term, as management is planning a major investment cycle.
Specifically, Amazon expects to invest about $200 billion in capital expenditures in 2026 — up sharply from the $131.8 billion it spent in 2025. This comes as the AI boom is causing a surge in demand for cloud computing.
“Customers really want AWS for core and AI workloads,” said Amazon CEO Andy Jassy during the company’s fourth-quarter earnings call. “And we are monetizing capacity as fast as we can install it.”
