AI Infrastructure Builders: Amazon vs Alibaba

When investors think about AI, they often focus on chipmakers and large language model companies. But two businesses that are building the infrastructure for AI to run on may hold long-term value: Amazon (NASDAQ: AMZN) and Alibaba Group (NYSE: BABA).

A closer look at both companies reveals significant differences in their approaches. Amazon is leveraging its global cloud leadership and ecosystem to power AI adoption worldwide, whereas Alibaba is embedding AI across China's vast digital economy.

Amazon offers a more established and predictable AI growth story, with its AWS (Amazon Web Services) remaining the global leader in cloud infrastructure. The company's ability to monetize AI across multiple business lines simultaneously creates a major advantage, as it improves advertising targeting, logistics optimization, product recommendations, warehouse automation, and streaming personalization.

Alibaba, on the other hand, may offer a more asymmetric opportunity due to its lower valuation, which reflects significant skepticism. Successful AI execution could have a much larger impact on investor perception and the stock price. The company has invested heavily in its Qwen large language models and AI tools for enterprises and merchants.