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Apple vs. Amazon: Which AI-Driven Tech Stock Has an Edge Now?
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Key Takeaways
Apple's AI push via Apple Intelligence and Google deal is driving device demand and developer adoption.
Amazon is investing up to $200B in 2026 capex, with heavy spending on AWS AI infrastructure.
Amazon's aggressive AI investments are pressuring margins and near-term free cash flow.
Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) are infusing AI into their core offerings. While Apple is infusing Apple Intelligence into its core operating systems that power iPhone, iPad, Mac and Wearables, Amazon’s cloud business, Amazon Web Services, forms the backbone of enterprise AI.Gartner expects worldwide spending on AI to be $2.52 trillion in 2026, a 44% increase over 2025. The spending projections bode well for both Apple and Amazon. However, which stock has an edge under the current scenario?
The Case for Apple Stock
Apple has witnessed strong shipments of its devices in markets where Apple Intelligence has been available. The company believes growing adoption of Apple Intelligence among developers will drive strong demand for their apps. Since the launch of Apple Intelligence, the company has introduced dozens of features, including writing tools and cleanup and made it available in 15 languages. Visual intelligence is helping users learn and do more with their content on iPhone. It is helping users search faster, take action and answer questions across their apps.
Apple’s multi-year collaboration deal with Alphabet is now expected to be a key catalyst in boosting Apple Intelligence features. Under the agreement, the next generation of Apple’s foundation models will be based on Google’s Gemini models and cloud technology. Apple Intelligence features, including a more personalized Siri, will now be powered by Google models. The addition of Google models, including Gemini, is expected to further boost the adoption of Apple models among app developers. Meanwhile, Apple Intelligence will continue to run on Apple devices and Private Cloud Compute.
Apple has been an outlier among “Mag 7” peers and hyperscalers in terms of AI infrastructure-related spending. The Google deal helps Apple conserve cash and generate strong free cash flow. The strong cash balance ($132.42 billion as of Dec. 27, 2025) is expected to help Apple focus more on developing hardware-oriented AI faster, privacy-first AI models, and AI-infra light footprint, driving up device sales.
Apple is also expanding its MacBook portfolio with the launch of MacBook Air and MacBook Pro. The new MacBook Air is powered by the latest M5, which features a faster CPU and next-generation GPU with a Neural Accelerator in each core. The 14-inch and 16-inch MacBook Pro, powered by M5 Pro and M5 Max, adds superior performance and AI capabilities. The launch of AirPods Max 2 is expanding the Wearables, Home and Accessories portfolio.
The Case for Amazon Stock
Amazon is benefiting from AI integration across its operations. Amazon Web Services (AWS) provides cutting-edge AI and machine learning services to enterprise customers, positioning Amazon as a leader in the rapidly expanding generative AI market. The company deploys AI extensively in its e-commerce platform for personalized recommendations, inventory management, and dynamic pricing optimization that enhances profitability. Logistics operations benefit from AI-powered routing algorithms and warehouse automation that reduce delivery times and operational costs significantly.
Amazon’s multi-year strategic partnership with OpenAI, alongside a commitment to invest up to $50 billion in the ChatGPT-maker. The initial tranche of $15 billion will be followed by an additional $35 billion contingent on certain conditions being met. AWS and OpenAI will co-create a Stateful Runtime Environment powered by OpenAI models, available on Amazon Bedrock, and AWS will serve as the exclusive third-party cloud distribution provider for OpenAI Frontier, the latter's enterprise agent platform.
However, the company’s aggressive investment posture, while strategically compelling over the long term, is compressing near-term cash flows. Amazon expects to spend roughly $200 billion in capital expenditure in 2026, nearly 53% jump from the $131.8 billion deployed in 2025, with the bulk directed toward AWS AI infrastructure. Amazon has noted that newly installed AI capacity is being absorbed almost as quickly as it becomes available. The company’s Trainium and Graviton chip families are now running at a combined annualized revenue rate exceeding $10 billion, with Trainium3 already launched and supply commitments expected to fill through mid-2026.
The Zacks Consensus Estimate for Amazon’s 2026 earnings is pegged at $7.78 per share, unchanged over the past 30 days, indicating a 8.5% increase over 2025’s reported figure.
The consensus mark for Apple’s fiscal 2026 earnings has been steady at $8.41 per share over the past 30 days, suggesting 12.7% growth over fiscal 2025.
Year to date, Apple shares have dropped 7.5% compared with Amazon’s fall of 8.9%.
AAPL and AMZN Performance
Image Source: Zacks Investment Research
Valuation-wise, both Apple and Amazon are overvalued, as suggested by the Value Score of D and C, respectively.
However, in terms of forward 12-month Price/Sales, Apple shares are trading at 7.74X, higher than Amazon’s 2.73X.
AAPL and AMZN Valuation
Image Source: Zacks Investment Research
Here’s Why Apple Has an Edge Over Amazon
Apple’s prospects are expected to benefit from its strong iPhone and Services business. Apple’s expanding AI footprint, thanks to the GOOGL collaboration, bodes well for growth prospects. These factors justify a premium valuation despite stiff competition in the smartphone and AI domains. However, Amazon’s enormous capital spending is expected to keep margins under pressure and squeeze free cash flow, which is a concern for investors.
View the Zacks #1 Rank List
Image: Bigstock
Apple vs. Amazon: Which AI-Driven Tech Stock Has an Edge Now?
Key Takeaways
Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) are infusing AI into their core offerings. While Apple is infusing Apple Intelligence into its core operating systems that power iPhone, iPad, Mac and Wearables, Amazon’s cloud business, Amazon Web Services, forms the backbone of enterprise AI.Gartner expects worldwide spending on AI to be $2.52 trillion in 2026, a 44% increase over 2025. The spending projections bode well for both Apple and Amazon. However, which stock has an edge under the current scenario?
The Case for Apple Stock
Apple has witnessed strong shipments of its devices in markets where Apple Intelligence has been available. The company believes growing adoption of Apple Intelligence among developers will drive strong demand for their apps. Since the launch of Apple Intelligence, the company has introduced dozens of features, including writing tools and cleanup and made it available in 15 languages. Visual intelligence is helping users learn and do more with their content on iPhone. It is helping users search faster, take action and answer questions across their apps.
Apple’s multi-year collaboration deal with Alphabet is now expected to be a key catalyst in boosting Apple Intelligence features. Under the agreement, the next generation of Apple’s foundation models will be based on Google’s Gemini models and cloud technology. Apple Intelligence features, including a more personalized Siri, will now be powered by Google models. The addition of Google models, including Gemini, is expected to further boost the adoption of Apple models among app developers. Meanwhile, Apple Intelligence will continue to run on Apple devices and Private Cloud Compute.
Apple has been an outlier among “Mag 7” peers and hyperscalers in terms of AI infrastructure-related spending. The Google deal helps Apple conserve cash and generate strong free cash flow. The strong cash balance ($132.42 billion as of Dec. 27, 2025) is expected to help Apple focus more on developing hardware-oriented AI faster, privacy-first AI models, and AI-infra light footprint, driving up device sales.
Apple is also expanding its MacBook portfolio with the launch of MacBook Air and MacBook Pro. The new MacBook Air is powered by the latest M5, which features a faster CPU and next-generation GPU with a Neural Accelerator in each core. The 14-inch and 16-inch MacBook Pro, powered by M5 Pro and M5 Max, adds superior performance and AI capabilities. The launch of AirPods Max 2 is expanding the Wearables, Home and Accessories portfolio.
The Case for Amazon Stock
Amazon is benefiting from AI integration across its operations. Amazon Web Services (AWS) provides cutting-edge AI and machine learning services to enterprise customers, positioning Amazon as a leader in the rapidly expanding generative AI market. The company deploys AI extensively in its e-commerce platform for personalized recommendations, inventory management, and dynamic pricing optimization that enhances profitability. Logistics operations benefit from AI-powered routing algorithms and warehouse automation that reduce delivery times and operational costs significantly.
Amazon’s multi-year strategic partnership with OpenAI, alongside a commitment to invest up to $50 billion in the ChatGPT-maker. The initial tranche of $15 billion will be followed by an additional $35 billion contingent on certain conditions being met. AWS and OpenAI will co-create a Stateful Runtime Environment powered by OpenAI models, available on Amazon Bedrock, and AWS will serve as the exclusive third-party cloud distribution provider for OpenAI Frontier, the latter's enterprise agent platform.
However, the company’s aggressive investment posture, while strategically compelling over the long term, is compressing near-term cash flows. Amazon expects to spend roughly $200 billion in capital expenditure in 2026, nearly 53% jump from the $131.8 billion deployed in 2025, with the bulk directed toward AWS AI infrastructure. Amazon has noted that newly installed AI capacity is being absorbed almost as quickly as it becomes available. The company’s Trainium and Graviton chip families are now running at a combined annualized revenue rate exceeding $10 billion, with Trainium3 already launched and supply commitments expected to fill through mid-2026.
Apple’s & AMZN’s Earnings Estimate Revisions Steady
The Zacks Consensus Estimate for Amazon’s 2026 earnings is pegged at $7.78 per share, unchanged over the past 30 days, indicating a 8.5% increase over 2025’s reported figure.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
The consensus mark for Apple’s fiscal 2026 earnings has been steady at $8.41 per share over the past 30 days, suggesting 12.7% growth over fiscal 2025.
Apple Inc. Price and Consensus
Apple Inc. price-consensus-chart | Apple Inc. Quote
Apple vs. Amazon: Stock Performance & Valuation
Year to date, Apple shares have dropped 7.5% compared with Amazon’s fall of 8.9%.
AAPL and AMZN Performance
Image Source: Zacks Investment Research
Valuation-wise, both Apple and Amazon are overvalued, as suggested by the Value Score of D and C, respectively.
However, in terms of forward 12-month Price/Sales, Apple shares are trading at 7.74X, higher than Amazon’s 2.73X.
AAPL and AMZN Valuation
Image Source: Zacks Investment Research
Here’s Why Apple Has an Edge Over Amazon
Apple’s prospects are expected to benefit from its strong iPhone and Services business. Apple’s expanding AI footprint, thanks to the GOOGL collaboration, bodes well for growth prospects. These factors justify a premium valuation despite stiff competition in the smartphone and AI domains. However, Amazon’s enormous capital spending is expected to keep margins under pressure and squeeze free cash flow, which is a concern for investors.
Currently, Apple and Amazon have a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.