<div id="readability-page-1">The stock market has taken a hit in recent weeks. Even share prices of some dominant businesses have fallen significantly. From its all-time high in February, Costco Wholesale (COST 1.85%) is down more than 16% (as of March 18). Amazon (AMZN 3.58%) has also taken a breather, with its shares off 20% from their peak last month. Investors should take a closer look at these two names. Is Costco or Amazon the better stock to buy right now? <h2>Why you should buy Costco</h2> Costco is a huge retailer that generated $62.5 billion in net sales in its fiscal 2025 second quarter (ended Feb. 16). Since its warehouses usually carry just 4,000 stock-keeping units, much fewer than the tens of thousands at typical supermarkets, it can leverage its powerful position with suppliers to get favorable pricing on merchandise. This leads to lower prices for customers. Costco offers great deals on quality goods that keep customers happy. And there is even a treasure-hunt atmosphere that encourages repeat visits. But the business really stands out because it operates on a membership model, requiring consumers to pay annual fees for the right to shop at a warehouse. This creates a high-margin and recurring revenue source, and it drives customer loyalty. Its membership base increased by 6.8% year over year to 78.4 million in the second quarter, and membership income was up 7.4%. The company's profits have grown steadily over the years. Diluted earnings per share (EPS) went from $1.35 in the 2015 second quarter to $4.02 in the latest fiscal quarter. Being able to consistently post same-store sales growth helps. Management uses excess profits to pay a dividend that currently yields 0.52%. That doesn't sound like much, but it is known to pay sizable one-time dividends, the most recent being $15 per share in January 2024. <h2>Why you should buy Amazon</h2> Despite its massive size, with $638 billion in 2024 sales, Amazon continues to benefit from multiple secular trends propelling its growth. It's the leader when it comes to e-commerce, providing consumers with fast and free shipping on so many items. With online shopping representing 84% of overall retail sales in the U.S., the company certainly has more growth in this area in the years to come. Cloud computing is another tailwind. Amazon Web Services (AWS) has long been the market-share leader in that category. And for the company, it remains a growth and profit driver, with a revenue gain of 19% and an operating margin of 36.9% in the fourth quarter. AWS also makes Amazon a key player in the artificial intelligence (AI) boom. Companies have already shown interest in using off-premises IT services. But recently, AWS has developed a wide range of AI-related tools to support its clients' various needs in the space. The company hasn't necessarily been known for being very profitable. However, this appears to be changing for the better. CEO Andy Jassy started cost-cutting and efficiency efforts in 2022, and the results are clear: Amazon was able to grow operating income by a stellar 86% in 2024, which was a faster pace than revenue growth. This is a sign of a financially stronger business. <h2>Valuation is key</h2> The case to buy Amazon is certainly compelling. In fact, I believe investors should pick the tech giant over the warehouse club retailer. The most obvious reason comes down to valuation. If investors want to buy Costco stock right now, they must be comfortable paying a price-to-earnings ratio (P/E) of 53. Since the company's initial public offering four decades ago, shares have rarely been more expensive. On the other hand, Amazon stock trades at a more reasonable P/E of 35. That seems like a better deal, especially when you consider that the company's EPS is slated to grow at a much faster rate than Costco's over the next three years. </div>

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The stock market has recently declined, affecting major companies like Costco and Amazon. Costco's stock is down over 16% from its peak, while Amazon has fallen 20%. Costco's membership model drives loyalty and profits, with a 6.8% increase in membership. In contrast, Amazon, with $638 billion in sales, benefits from e-commerce and cloud computing growth, showing improved profitability. While Costco's P/E ratio is high at 53, Amazon's is more reasonable at 35, making it a more attractive investment option for growth-oriented investors.

- The stock market has recently experienced declines, with significant drops in share prices for companies like Costco and Amazon.  
- Costco's membership model and steady profit growth make it an attractive investment, while Amazon benefits from e-commerce leadership and cloud computing growth, showing improved profitability.  
- Despite Costco's strong fundamentals, Amazon's more favorable valuation and faster expected earnings growth suggest it may be the better stock to buy at this time.

Best Stock to Buy Right Now: Costco vs. Amazon