The year 2025 hasn’t been very kind to Amazon. Its stock has dropped more than 20% so far, following the overall market downturn. According to analysts at Wells Fargo, Amazon has even hit the brakes on some new data center projects. This is interesting because just weeks ago, CEO Andy Jassy had said there were no plans to slow down on data center expansion.
In contrast, Costco Wholesale is showing strength. Its stock is up by around 7% this year close to the gains it made in the first four months of 2024. So while Amazon struggles, Costco seems to be holding strong. But when it comes to investing, which is actually the better stock to buy right now? The answer isn’t what you might expect.
Costco’s Edge in a Tough Economy
Costco is doing better than Amazon in 2025 mainly because it’s less affected by the current economic challenges. The Trump administration’s new tariffs have made investors worry about rising prices and a slower economy.
Of course, Costco isn’t completely untouched by tariffs. In its fiscal 2025 Q2 earnings call back in March 2025, CEO Ron Vachris mentioned that about one-third of Costco’s U.S. sales come from imported products. But he also pointed out that less than half of those imports are from China, Canada, or Mexico the countries facing the highest tariff hikes.
Vachris also said the company is ready to
“minimize the impact” of any added costs on its customers. He added, “In uncertain times, our members have historically placed even greater importance on the value of high-quality items at great prices.”
That kind of resilience is exactly what investors look for when markets get rough. It’s why Costco is considered a safe place to park money during uncertain times.
Amazon’s Strength: Growth and Innovation
Costco may be the more stable option in the short term, but Amazon shines when it comes to long-term growth. In its latest quarterly report, Amazon’s revenue rose 10% year over year. Costco’s sales also grew, but slightly less at 9.1%. That’s still impressive for both companies but let’s dig deeper.
Amazon’s net income nearly doubled to $20 billion in Q1. Meanwhile, Costco’s profits only grew by 2.6%. Analysts expect Amazon’s earnings to rise another 19.6% next year, while Costco is projected to grow at about 10.7%. Why the gap? Amazon simply has more ways to grow. From expanding its core business to exploring new ones, Amazon is built for scale.
It’s investing heavily in artificial intelligence (AI), entering healthcare, and even owns Zoox a self-driving vehicle startup that could boom if robotaxis take off. On top of that. Amazon’s Project Kuiper is expected to launch soon, bringing high-speed internet via satellite to the world. Costco doesn’t have these kinds of growth channels. That makes Amazon the more exciting option for long-term investors.
The Surprising Reason Amazon Wins
So, why might Amazon be the better stock to buy right now? It all comes down to value and this might catch you off guard. Amazon has always been the kind of stock that looks pricey by traditional metrics, yet it kept climbing. But today, it’s a different story. Compared to Costco, Amazon actually looks cheap.
Amazon’s forward price-to-earnings ratio is 26.2. That might sound a bit high until you see that Costco’s is 54.4. In my view, Amazon’s projected growth makes its valuation reasonable. On the other hand, Costco’s valuation looks too stretched based on its slower earnings growth. Costco might continue to outperform in the near term. But if you’re thinking long term say, the next ten years my pick is Amazon, both in theory and in practice.
