Amazon vs. Target: Where Should Long-Term Investors Put Their Money?

Deciding between e-commerce dominance and brick-and-mortar stability requires a close look at the numbers. In this article, we'll take a look at Amazon(NASDAQ:AMZN) and Target (NYSE:TGT) to see which stock is a better buy.

Amazon dominates digital commerce and cloud infrastructure, while Target focuses on an omnichannel approach with roughly 2,000 stores across the United States. While both compete for consumer dollars, their business models and growth trajectories differ significantly. This comparison analyzes their financials and risks to help you navigate these retail leaders.

The case for Amazon.com

Amazon operates a massive digital marketplace and is a prominent name among retail stocks through its global online store and Amazon Web Services (AWS) cloud computing division. The company serves a diverse range of customers, including individual shoppers, third-party vendors, and enterprise technology teams. It continues to leverage its proprietary logistics network and high-margin advertising services to maintain its leadership in the global economy.

According to its latest annual report filed for FY 2025, revenue reached $716.9 billion, representing growth of nearly 12.4% compared to the previous year. This growth was accompanied by net income of $77.7 billion, which reflects a net margin of close to 10.8%.

Amazon has total cash of $122.9 billion against total debt of $251.6 billion. Its debt-to-equity ratio is 45.6%, and its operating cash flow is $161.4 billion.

The case for Target

Target is a general merchandise retailer that uses its physical stores as fulfillment hubs for its digital sales. The company has established strong commercial ties with partners like Apple (NASDAQ:AAPL), CVS, Disney, Levi's, and Starbucks (NASDAQ:SBUX) to drive guest traffic. It also operates the Target Plus marketplace and the Shipt delivery service while navigating the conclusion of its partnership with Ulta Beauty.

Based on its latest annual report filed for FY 2025, revenue reached $104.8 billion, which was a decrease of nearly 1.7% from the prior year. The company reported net income of $3.7 billion for the period, resulting in a net margin of 3.5%.

Target's total cash is $5.4 billion against total debt of $19.2 billion. Its debt-to-equity ratio is 107.5%, while its operating cash flow is $8.7 billion.

Risk profile comparison

Amazon faces intense competition across multiple industries, including e-commerce and cloud services, from well-funded competitors with significant resources. Its international operations expose the business to various geopolitical and regulatory risks, such as trade disputes and local licensing requirements. The complexity of its global fulfillment network and a high reliance on third-party suppliers and shipping companies create additional operational challenges for the business.

Target is susceptible to shifts in consumer spending patterns and macroeconomic instability within the U.S. economy, including inflationary pressures. The company manages significant supply chain risks and inventory shrink, which refers to the loss of products due to theft or administrative errors. Additionally, it faces ongoing legal risks, including product liability claims.

Valuation comparison

The forward price-to-earnings (P/E) ratio, which uses future earnings estimates, suggests Target is the more affordable option, and its price-to-sales (P/S) ratio also shows it trading at a lower multiple of sales.

Which stock would I buy in 2026?

Between the two, I wouldn't hesitate to own Amazon. That's because if I were looking more in the traditional retail space, I would pick Walmart over Target, as I feel it's done a better job of integrating technology into its business and has an undervalued advertising arm it's building. And between Target and Amazon, the choice gets even easier for me.

While Amazon does have a retail platform, what's more interesting is its connection to artificial intelligence (AI), a market that will be immensely profitable. In 2026, the worldwide AI market is valued at $707 billion, but that's expected to jump to $1.9 trillion by 2032.

According to Statista, as of Q1 2026, Amazon is the global leader in cloud infrastructure via AWS, with 28% market share. The next-closest company is Microsoft, with a 21% market share. Amazon is also making its own chips, which helps it become more vertically integrated, achieve higher margins, and not rely on third-party suppliers. It's also integrating AI into its Alexa devices and has a stake in the start-up Anthropic, so Amazon has many ways to profit from AI. Between Target and Amazon, there's just a lot more money that Amazon can haul in, making it a stock I'd rather own for the long haul.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, Starbucks, Target, Ulta Beauty, and Walmart. The Motley Fool has a disclosure policy.