Investment Idea

Amazon and Alibaba show clear growth

09/02/2021 | 3 min read

Both of the industry giants Alibaba und Amazon are not only dominating the e-commerce platforms, but have for some time been fast expanding in new business areas.

Both of the industry giants Alibaba und Amazon are not only dominating the e-commerce platforms, but have for some time been fast expanding in new business areas. In this regard, both the tech giants have in the recent past mainly focused on their profitable cloud-business. Parallels can also be drawn between the two tech companies and their company figures. Almost as expected, analyst’s forecasts were exceeded by far. The fact that the two company founders, Jack Ma and Jeff Bezos are also now retiring from the top management of their companies is another astonishing feature of the two companies that are both so accustomed to success.

Alibaba is impressing in all regards

Chinese Internet giant Alibaba remains on track for success after its usual strong figures in the third fiscal quarter. The company, headquartered in Hangzhou, China has grown significantly despite the crisis and once again exceeded analysts’ expectations. Alibaba CEO Daniel Zhang announced that revenues in the third quarter rose by almost 37% in year-on-year to EUR 28.3 billion (CNY 221.1 billion). The strong growth is due in particular to the Chinese economy’s fast recovery. Furthermore, Alibaba’s cloud division grew by 50% in the three months leading up to the end of December, reaching profitability for the first time. The Chinese IT group managed to grow in the cloud business in a short period of time, even surpassing the growth in the cloud division of its biggest competitor, Amazon AWS. Alibaba’s business with retail and public sector customers is also driving up revenues. As a result of these positive developments, profit rose 52% year-on-year to a total of CNY 79.4 billion. The People’s Republic of China has now become one of the most important e-commerce markets in the world and one of Alibaba’s biggest profiteers. Even though the pandemic and the resulting measures have hit the country hard, online retail experienced a significant upswing and Alibaba thus managed to achieve strong sales growth even during the pandemic. The company is investing the profits in numerous acquisitions: it acquired Singapore-based e-commerce platform Lazada and Chinese video platform Youku Tudou. Alibaba also invested in the US ride-sharing app Lyft. Overall, the e-commerce conglomerate is not only defying the current crisis, but is using it to drive its own growth.

Amazon CEO Jeff Bezos steps back

Jeff Bezos, the 57-year old manager of the American company announced to the world he was stepping down as CEO from the largest online shopping company on Tuesday evening after the close of the stock exchange. Bezos has not only been at the top of the company for 27 years, but also founded it himself in 1994. He managed to turn the then online bookstore into one of the world’s most valuable corporations with an estimated value of 1.69 trillion USD. Bezos will remain as CEO with the company until the third quarter of 2021. After that, he will continue to have the opportunity to make important decisions for the company as Executive Chairman of the Board of Directors. Then starting in July, Andy Jessy, the current person in charge of the AWS Cloud division, is expected to take over as CEO. At the same time as the announcement of Jeff Bezos’ resignation, Amazon published the figures for the past financial year. The company did not only meet market expectations but even exceeded them. Due to the global pandemic and the associated higher volume of online orders, the group earned 21.3 billion in 2020. This not only represents a year-on-year increase of almost 84%, but also represents the company’s best ever performance. In particular the cloud business, the new CEO Andy Jessy’s division, has contributed enormously to this result. The business model of AWS is based, on the one hand, on offering storage space on the internet as a so-called cloud solution. However, the main revenue driver is the AWS platform, which is used by countless companies for the development and operation of their internet applications. With the help of AWS, quarterly revenue for the fourth quarter of 2020 increased by almost 28% compared to the previous year. The company also increased the number of employees in 2020 from around 798,000 in 2019 to 1,298,000 in 2020.

Stock overview

Alibaba Group Holding Limited‘s stock is currently being traded at USD 267,31 (04.02.2021). The stock reached its yearly high of USD 317,14 (27.10.2020) and yearly low of USD 176,34 (23.03.2020). 61 Bloomberg analysts place the stock on BUY, 2 on HOLD and 0 analysts put it on SELL.


Note: Past performance is no reliable indicator of future results. Inc’s stock is currently being traded at USD 3298, 02 (04.02.2021). The stock reached its year high of USD 3531,45 (09.02.2020) and year low of USD 1676,61 (12.03.2020). 55 Bloomberg analysts place the stock on BUY, 1 on HOLD and 0 analysts place it on SELL.


Note: Past performance is no reliable indicator of future results.

This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

The products are not capital protected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.