Amazon (AMZN Quick QuoteAMZN - Free Report) arrived at streaming as one piece of a sprawling ecosystem, bundling Prime Video into a Prime membership that also includes shipping, shopping and cloud-adjacent perks, while leaning on the $8.5 billion MGM acquisition and an 11-year NBA and WNBA rights deal to deepen its content and live-sports footprint. Netflix (NFLX Quick QuoteNFLX - Free Report) , by contrast, built the modern streaming category, and its content-first model continues to anchor a subscriber base of more than 325 million paid memberships, with advertising and live sports now layered on top as fresh growth levers.

Netflix is doubling down on advertising, gaming and live events to extend growth beyond pure subscriber additions, while Amazon's Prime Video has crossed into profitability and is being positioned internally as a flywheel for Prime retention and a new advertising revenue stream. Both companies head into the back half of 2026 and 2027 with packed content slates, big swings on live sports, and management teams pointing to durable, double-digit growth.

Let's delve deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.

The Case for AMZN Stock

Amazon's strength lies in diversification. Prime Video no longer operates as a standalone bet; management described it on the first-quarter 2026 call as a profitable, large business that drives new Prime sign-ups while diversifying advertising revenues, a dynamic that insulates it from the subscriber-by-subscriber pressure pure-play streamers face. The content pipeline reinforces this: Amazon MGM Studios used its 2026 Upfront to unveil The Lord of the Rings: The Rings of Power Season 3 premiering Nov. 11, Fourth Wing, a Reacher Season 5 renewal, and the Vought Rising prequel set for 2027, alongside an 11-year NBA and WNBA agreement that brings NBA games to Prime Video starting October 2026. The Obsession Is In Session initiative further signals a deliberate push into young-adult audiences, broadening the demographic base beyond Netflix's traditional strongholds.

Beyond streaming, Amazon's scale advantage is the real differentiator. AWS revenues grew 28% year over year in the first quarter of 2026, with a record $364 billion backlog excluding the more recent Anthropic commitment, while custom silicon (Trainium) revenue commitments have surpassed $225 billion. This cloud and AI engine funds content investment without straining the core business the way it might for a single-vertical company. The challenges are real: CFO Brian Olsavsky flagged roughly $1 billion in incremental second-quarter costs tied to Amazon LEO, rising memory component costs, and elevated capital expenditures of $43.2 billion in the first quarter alone, which management acknowledges will pressure near-term free cash flow. Still, Jassy framed this spending as ahead of revenue capture rather than a sign of strain, given Trainium2 is largely sold out and Trainium3 is nearly fully subscribed. The combination of streaming optionality and infrastructure-driven earnings power gives Amazon a multi-engine growth profile that Netflix cannot replicate.

The Zacks Consensus Estimate for AMZN’s 2026 earnings is pegged at $8.85 per share, indicating a 23.43% increase from the figure reported in the year-ago quarter.

The Case for NFLX Stock

Netflix's case rests on focus and execution within its core category. First-quarter 2026 revenues rose 16% to $12.25 billion, and management reiterated full-year guidance of 12-14% revenue growth with a 31.5% operating margin, alongside a goal to roughly double advertising revenues to about $3 billion. The company highlighted advertiser growth of over 70% year over year to more than 4,000 advertisers and said ad-supported plans represented 60% of sign-ups in ad-tier markets. Content remains the engine: the 2026 slate includes final seasons of The Witcher and Outer Banks, Stranger Things in animated form, Avatar: The Last Airbender Season 2 and a Bridgerton Season 5 confirmed for 2027, alongside live events like the Westminster Kennel Club Dog Show starting February 2027 and an expanded NFL package.

Netflix's opportunities lie in under-penetrated areas: management estimates capturing just 7% of a $670 billion addressable entertainment market and roughly 5% of global TV view share, leaving runway in advertising, gaming and live sports. The Interpositive acquisition is also expected to bolster generative AI production tools for filmmakers. Yet Netflix's single-vertical exposure is also its central vulnerability — its growth depends almost entirely on content engagement, pricing power and ad-tier conversion, with no comparable cloud or infrastructure business to diversify earnings. Reed Hastings' upcoming exit as board chair also marks a generational leadership shift worth monitoring.

The Zacks Consensus Estimate for 2026 earnings is pegged at $3.60 per share, up 2% over the past 30 days. This indicates a 42.29% increase from the previous year.

Valuation and Price Performance Comparison

AMZN trades at a forward 12-month P/E of 26.01X versus NFLX's 20.81X, making Amazon the nominally pricier stock. However, that premium reflects Amazon's broader earnings base spanning AWS, advertising and streaming, rather than reliance on one segment.

AMZN vs. NFLX: P/E F12M Ratio

Image Source: Zacks Investment Research

Price action reinforces the divergence: NFLX shares have lost 17.5% year to date, while AMZN has returned 5.5% over the same period. Given Amazon's multi-engine growth profile and Netflix's narrower, single-vertical exposure, Amazon's relative premium appears better justified than Netflix's lower multiple, which reflects building skepticism rather than a clear undervaluation signal.

AMZN Outperforms NFLX Year-to-date

Image Source: Zacks Investment Research

Conclusion

Amazon's edge over Netflix stems from diversification: Prime Video's newfound profitability, an expanding live-sports and content slate, and an AWS/advertising engine generating substantial backlog and Trainium revenue commitments, even as elevated capital expenditures and rising input costs pressure near-term free cash flow. Netflix's focused content strategy and growing ad business remain credible, but its single-vertical dependence leaves less room for error, reflected in its steep year-to-date stock decline versus Amazon's gain. Given Amazon's broader earnings resilience and more justified valuation premium, it appears to hold better upside potential from here. Investors may want to track and watch AMZN stock closely, while holding existing NFLX positions and waiting for a more attractive entry point before adding to Netflix. AMZN carries a Zacks Rank #2 (Buy), while NFLX has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.