Alphabet and Amazon: Cloud Giants Face Off as Q4 Earnings Loom

The tech investment world is holding its breath as two of the industry’s heaviest hitters prepare to reveal their Q4 results. Alphabet will report after-market hours on Wednesday, February 4, followed by Amazon on Thursday, February 5. Only Nvidia remains to report later in February among the Mag 7 supergroup. These earnings carry particular weight as investors scrutinize whether major technology players can counter mounting concerns about capital expenditure demands tied to artificial intelligence infrastructure.

The broader market context matters here. Last week’s earnings from other Mag 7 members revealed a common tension: companies are investing heavily in AI capabilities, yet growth stories aren’t always matching investor expectations. Meta performed better than peers, but overall sentiment among the market has been cautious. For both Alphabet and Amazon, all eyes will be on their cloud divisions—Google Cloud and Amazon Web Services (AWS)—to demonstrate that AI investments are translating into real revenue acceleration.

Alphabet’s Cloud Ambitions Set Stage for Q4 Growth

According to Zacks estimates, Alphabet is projected to deliver Q4 revenue of $94.7 billion, representing a 16% year-over-year increase from $81.62 billion. What’s particularly noteworthy is the performance expected from Google Cloud, which Zacks projects at $16.25 billion in quarterly revenue—a robust 36% jump compared to $11.95 billion in the prior-year quarter.

On the earnings front, Alphabet’s Q4 EPS is anticipated to reach $2.58 per share, an 18% climb from $2.15 a year earlier. The company has built an impressive track record of beating expectations, having surpassed Zacks EPS consensus for 11 consecutive quarters with an average surprise margin of 18.74% over its last four reports. This consistency suggests management confidence and operational excellence across the business.

Amazon’s AWS Holds the Crown, But Growth Questions Persist

Amazon paints a different picture in sheer scale. Q4 sales are forecast to hit $211.56 billion, climbing 12% from $187.79 billion last year. However, the standout metric is AWS revenue, which is expected to reach $35.02 billion—a 21% increase from $28.78 billion in the comparative period. Despite AWS’s leadership position as the world’s largest cloud provider, the growth rate of 21% sits below the 36% expansion Alphabet’s Google Cloud is experiencing.

Amazon’s Q4 EPS is projected at $1.98 versus $1.86 a year prior, representing a modest 6% increase. Still, Amazon has maintained an even longer streak of beating expectations, exceeding EPS estimates for 12 straight quarters with a remarkable average earnings surprise of 22.47% in its last four quarters.

Valuation Gap Narrows as Alphabet Rally Plateaus

Stock performance tells a revealing story about market sentiment. After each implemented 20-1 stock splits in 2022, Alphabet and Amazon moved in lockstep for years, each climbing above the $200-per-share threshold. The synchronization has broken down recently. Alphabet has been a clear winner, climbing more than 80% over the past year and now sitting 230% higher than three years ago. Investors have attributed this rally to accelerating AI-driven businesses and strengthening Google Cloud momentum alongside improving advertising trends.

Amazon, by contrast, has stalled. The stock has declined 2% year-over-year despite a three-year return of 130%. The deceleration stems partly from AWS showing slower momentum relative to market expectations, despite absolute growth that would be envied in most other industries.

From a valuation standpoint, the picture has shifted. Alphabet stock now trades near $340 at 31X forward earnings. Amazon, at under $240 per share, trades at 30.7X forward earnings. For years, Amazon commanded a P/E premium; today, the tables have turned slightly in Amazon’s favor on a relative basis.

Growth Rates Tell a Different Story

The earnings trajectory over the next two years adds nuance to the investment decision. For fiscal 2025, Amazon’s EPS is forecast to expand nearly 30% to $7.18, compared to Alphabet’s projected 31% earnings growth reaching $10.57 per share. However, the forward outlook diverges meaningfully. Amazon projects 10% EPS growth for fiscal 2026, whereas Alphabet is expected to deliver only 5%. This suggests Amazon’s earnings may decelerate more sharply after a strong 2025, while Alphabet maintains steadier long-term growth momentum.

Making the Investment Call

Both companies face a critical test with their imminent Q4 results. If they can demonstrate that AI-driven cloud infrastructure spending is generating meaningful revenue growth without CapEx becoming unsustainable, both stocks could find support. Current sentiment favors Amazon stock as a near-term opportunity, reflected in its Zacks Rank #2 (Buy) rating. Alphabet carries a Zacks Rank #3 (Hold) following its substantial rally, though its superior long-term growth profile shouldn’t be overlooked by investors with longer time horizons.

The cloud computing rivalry between Alphabet and Amazon represents more than just a two-horse race—it embodies the broader AI infrastructure build-out that will define technology investment for years to come. Investors must decide whether they prefer the growth trajectory of Alphabet or the valuation entry point and near-term earnings momentum of Amazon.