Meet the E-Commerce Stock That's Up 25% in 2026. Is It a Better Buy Than Amazon?
Key Points
After years of struggles, Etsy's niche marketplace has narrowed its focus, and growth is back on the table.
Amazon's sprawling logistics network is key to its success as it enables an exceptional value for shoppers.
The better stock to buy isn’t necessarily the one that trades at the cheapest valuation multiple.
- 10 stocks we like better than Etsy ›
When you think of online shopping, Amazon (NASDAQ: AMZN) is most likely the first company that pops into your head. From only selling books to now offering cars and small homes, this behemoth of an organization dominates the world of commerce.
The "Magnificent Seven" constituent has risen 5% in 2026 (as of June 11). While it's hard to complain about a positive gain given the volatility markets have experienced, this return comes up well short of another e-commerce stock, which is up 25% this year.
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Is this much smaller online marketplace a better buy than Amazon right now?
Image source: Getty Images.
Small fish in a big pond
Retail is a gargantuan industry. Within this, the e-commerce category is also massive, with global sales estimated to be more than $6.4 trillion in 2026. That's a big pond to fish in for Etsy (NYSE: ETSY), whose shares are handily outperforming Amazon's this year. It has successfully carved out a niche in the market.
Etsy's focus on handcrafted, vintage, and unique goods is a key differentiator. However, its performance in recent years, following a surge in demand during the depths of the pandemic, has been disappointing, as growth slowed dramatically. This explains why the shares trade 77% off their peak.
But the company's fundamentals are improving. Gross merchandise sales are projected to rise in the low single digits in 2026, after four straight years of declines. Etsy's profitability is improving, with net margin expanding from 12.2% (for the core Etsy marketplace) in Q1 2025 to 16.6% in the latest quarter.
And management is focused on launching product enhancements to boost engagement. For instance, Etsy is leveraging artificial intelligence (AI) to help streamline the listing process for sellers and improve search for buyers.
The biggest challenge for Etsy, though, is that its performance is deeply tied to macroeconomic factors. Because its merchandise is largely discretionary, consumers don't feel the need to visit the marketplace frequently, especially when inflation is high. The number of repeat buyers, those who made purchases on two or more days in the past 12 months, declined 3.2% year over year.
Scale is the advantage
Etsy is winning the race in 2026, but Amazon's stock's trailing-five-year rise runs laps around its smaller industry peer.
Amazon's dominant position in online retail is difficult to overstate. There were almost 2.1 billion visitors to Amazon.com in April. Of total online shopping in the U.S., 40% of this activity was accounted for by Amazon's marketplace. And its online stores raked in $64 billion in revenue in the first three months of 2026. The company's scale is unmatched.
The customer value proposition can't be beat. Extremely low prices on a massive selection of goods, with fast and free delivery, give individuals a level of convenience they have never experienced before. The compelling Prime membership supports consumer loyalty.
Logistics play a critical role. Amazon has invested aggressively to build the necessary infrastructure to bring down shipping costs and speed up delivery times. This leads to a durable advantage against its rivals, driving sustainable financial performance.
View these stocks through a risk lens
While Etsy and Amazon operate in the same industry, they deploy different strategies. Etsy is a niche marketplace that might only draw hobbyist sellers and buyers. Amazon aims to be the store that sells everything, prioritizing convenience and catering to the masses.
Despite what the scoreboard shows in 2026, Amazon is the better buy right now. It trades at a forward price-to-earnings ratio that's 144% higher than Etsy's But its proven competitive advantages and ability to steadily grow in all economic environments make it a safer choice.
Investors comfortable taking on more risk and accepting greater uncertainty over the next three to five years might lean toward Etsy. If it can execute extremely well and macro conditions are accommodative, which aren't guaranteed, then it can be a winner.
Should you buy stock in Etsy right now?
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Etsy. The Motley Fool has a disclosure policy.
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