Key Points
Amazon leverages its massive cloud computing and global e-commerce dominance to drive high net margins.
Chewy relies on its deep pet-focused brand loyalty and growing veterinary services to capture animal care market share.
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The retail landscape continues to shift as e-commerce giants and niche specialists battle for consumer dollars. Investors must choose between the diversified powerhouse Amazon.com (NASDAQ:AMZN) and the pet-care specialist Chewy (NYSE:CHWY) in 2026.
Amazon dominates through a vast logistics network and its high-margin cloud division, while Chewy builds a dedicated ecosystem around recurring pet subscriptions. These companies both leverage digital convenience but offer vastly different exposure to consumer discretionary spending. Comparing them helps identify which business model aligns better with your risk tolerance and long-term investment goals.
The case for Amazon.com
Amazon operates a global e-commerce and cloud-services business, serving consumers, third-party sellers, and enterprise AWS customers. Within the retail stocks landscape, it continues to face regulatory scrutiny regarding Prime subscriptions and marketplace oversight. The company is also involved in a high-profile antitrust class action involving roughly 288 million members, which could influence future operations.
In 2025, revenue reached nearly $716.9 billion, representing growth of 12.4% over the prior year. The company reported a net income of roughly $77.7 billion for the same period, continuing a trend of rising profitability. This resulted in a net margin of close to 11%, which is the percentage of revenue that remains as profit after all operating and non-operating costs are paid.
As of its December 2025 balance sheet, the debt-to-equity ratio was roughly 0.4x, which compares total debt to shareholder equity to measure financial leverage. The current ratio was approximately 1.1x, comparing short-term assets to short-term liabilities to measure immediate liquidity.
Free cash flow for the period was nearly $7.7 billion, representing the cash remaining after the company covers its operating expenses and capital investments.
The case for Chewy
Chewy serves pet parents in the U.S. and Canada through its platform, offering approximately 190,000 products from 4,000 brands. The company recently expanded its physical footprint in pet healthcare by acquiring Modern Animal, adding veterinary clinical expertise and 47 planned locations. Its Autoship subscription program drives recurring revenue and maintains a nationwide fulfillment network, simplifying repeat purchases for consumers.
In 2025, revenue reached approximately $12.6 billion, representing nearly 6.2% growth as the company expanded its customer base. The company reported a net income of roughly $222.8 million for the same period, showing its ability to generate a profit in the competitive pet market. Its net margin was approximately 1.8%, the percentage of revenue retained as profit after all business expenses.
As of its February 2026 balance sheet, the debt-to-equity ratio was roughly 1.0x, while the current ratio was 0.9x, comparing short-term assets to liabilities.
Free cash flow reached nearly $562.4 million, which is the cash left over after paying for operations and capital expenditures. Note that stock-based compensation accounted for roughly 43.1% of operating cash flow, inflating reported cash generation because it is a non-cash expense added back in the cash flow statement.
Risk profile comparison
Amazon faces intense competition across all major segments from rivals like Alphabet and Microsoft. Government authorities worldwide are increasing scrutiny, with the company facing a potential $2.5 billion settlement with the FTC. Geopolitical risks in markets such as China and India also pose challenges due to evolving local regulations and trade restrictions.
Chewy deals with heavy competition from Walmart and Amazon in the pet retail space. The integration of Modern Animal clinics carries execution risks and requires significant capital spending to build out new locations. Additionally, the company is vulnerable to shipping disruptions because it relies on third-party logistics providers to deliver orders to customers.
Valuation comparison
Amazon carries a lower Forward P/E ratio, which compares the stock price to future earnings estimates, while Chewy offers a lower P/S ratio, measuring price against total revenue.
| Metric | Amazon.com | Chewy |
|---|---|---|
| Forward P/E | 23.3x | 30.4x |
| P/S ratio | 4.1x | 0.8x |
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
Both companies face risks and intense competition, but overall are solidly positioned in their respective markets. Amazon has massive scale in e-commerce, while Chewy serves the niche pet supplies market.
According to the American Pet Association, Americans spent $158 billion on their pets in 2025, giving Chewy a large market to expand into. Still, I would prefer to buy Amazon primarily for its fast-growing, highly profitable cloud business.
Amazon is a more diversified business with several growing revenue streams across advertising, third-party fulfillment services, cloud, and e-commerce. Its large size hasn’t anchored its growth all that much, as it is growing revenue faster than Chewy.
Chewy’s trailing-12-month revenue grew 6.1%, slower than Amazon’s 15.8%. Amazon may continue to see higher growth, as Amazon Web Services continues to experience significant demand for compute and custom AI chips, with segment revenue up 37% year over year in the second quarter.
Relative to its momentum, Amazon appears reasonably priced for a new investment. Investors can buy the stock at a forward P/E of 23, despite analysts expecting earnings to grow at a 20% annualized rate in the coming years.
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John Ballard has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Chewy, Microsoft, and Walmart. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
