Amazon vs. Google – Who Will Win?

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Amazon.com, Inc. (NASDAQ:AMZN) is the undisputed champ of e-commerce. Google Inc. (NASDAQ:GOOGL, GOOG) is the web’s advertising platform whose very name is synonymous with online search.

And while it may seem that these tech stocks don’t have much in common given their different businesses, AMZN stock and GOOG stock are increasingly facing off in their efforts.

That means investors are most likely going to have to place bets on which one of these internet titans will reign supreme — and whether Google stock or Amazon stock is better for their portfolio.

AMZN vs. GOOG — Cloud Computing

amazon web services awsPerhaps the most high-profile area of competition between the two involves cloud computing and data service efforts — particularly the Amazon Web Services arm of AMZN stock that has gotten so much attention lately.

The latest Amazon earnings included broken-out results for Amazon Web Services for the first time ever; AWS by itself is projected to tally more than $6 billion in revenue for 2015, which wowed many AMZN stock holders.

But revenue isn’t profit, and the ever-growing business of cloud computing faces many challenges on the bottom line thanks to downward pressure in costs.

Here’s where GOOG stock comes in, because this week the tech giant cut prices on its own cloud computing services by 15% to 20%, according to reports. Google already has fought similar consumer-facing price wars with its Google Drive service as a way to put the screws to competitors like Box Inc. (BOX) and soon-to-be-publicly-traded Dropbox, as a way to trade profitability for market share.

The war with Amazon will be one of deep pockets, however, as AMZN stock is much better capitalized than those smaller and unprofitable competitors.

AMZN vs. GOOG — Online Advertising

GOOG is king of online ads, but because Amazon is one of Google’s biggest customers, with massive buys on its AdWords platform to market its wares, some say Jeff Bezos & co. are looking to go their own way in order to save cash — and make a bit more for AMZN stock.

Late last year, reports emerged that AMZN was working on an advertising platform that will allow it to sell ads and place them on its own site as well as affiliates’.

Given the move towards “programmatic” advertising, where websites of all shapes and sizes prefer to go through a main vendor of ads instead of selling individual accounts, the timing is right. But can Amazon really compete with GOOG here? That remains to be seen.

Of course, difficult is never impossible when it comes to tech stocks.

Facebook Inc. (FB) has emerged as a very real competitor to the seemingly invincible Google when it comes to online ads, providing marketers with sophisticated targeting of its users. Just as FB has a huge platform of its own, so does AMZN stock with its Amazon.com portal that serves some 75 million users each month.

Stranger things have happened than a company with that kind of reach figuring out how to make money off those customers.

AMZN vs. GOOG — Online Shopping

google express goog stockNot to be outdone, Google has been cooking up some e-commerce initiatives of its own to compete with Amazon on its home turf. In the last year or so we’ve seen same-day delivery service launched via Google Express, as well as hopes to roll out a “buy now” button on its search results for various products.

Now, none of these efforts are big contributors just yet. But Google Express seems to have been a hit with consumers in test markets like San Francisco and New York, since GOOG just added Chicago, Boston and Washington, D.C., to the list of markets it serves. And if it’s a logical argument that Amazon should leverage its e-commerce audience to sell ads, then it’s equally logical that GOOG stock should leverage is massive search audience to sell products online.

I’m skeptical of local delivery services, since the margins have been notoriously thin forever and plenty of failed services like Webvan illustrate the difficulty of success here.

But selling products directly instead of simply pointing customers to the right site — frequently Amazon.com itself? That seems an idea with big potential.

The verdict is out on all of these efforts, and there’s no doubt that both AMZN stock and GOOG stock will be driven in the short term by their current areas of influence — e-commerce for Amazon stock, and ads for Google stock.

But who knows what the future holds. Right now, each tech giant seems equally capable of winning these three turf wars.

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/05/amzn-goog-stock-amazon-google/.

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