Rosenblatt Picks Amazon Over Google for AI. Google Cloud's Numbers Disagree.

Amazon and Alphabet are both riding the AI wave. But Rosenblatt Securities analyst Scott Devitt thinks one of them is riding it better. He initiated coverage of both stocks with Buy ratings this week — handing Amazon a $335 price target implying 26% upside, and Alphabet a $410 target implying 18.9% upside. The gap between those two numbers is the whole argument in miniature.

That's the call everyone picked up. Here's the part that makes it more complicated:

Google Cloud just topped $20 billion in quarterly revenue for the first time, growing 63% year over year in Q1 2026. AWS grew 37% year over year in the second quarter, marking its fifth consecutive quarter of acceleration. Google's cloud is smaller — but it's growing nearly twice as fast.

What's not in dispute: both companies are spending aggressively on AI infrastructure, both carry Strong Buy consensus ratings from Wall Street, and both are winning real enterprise cloud business.

What is in dispute: whether Amazon's scale and diversification make it the superior AI investment, or whether Google Cloud's explosive growth rate and custom chip advantage make Alphabet the better bet from here.

On one side, Devitt's case for Amazon is built on compounding moats. He called Amazon "one of the most resilient leaders" in Rosenblatt's coverage and argued its AI position is still underappreciated, particularly as its cloud business continues to accelerate. He expects AWS growth to hit 45% by year-end 2026 — well above the Street's 38% estimate — and projects AWS revenue surpassing $335 billion by 2028. The broader argument is that Amazon's combination of its own computing infrastructure and its massive physical fulfillment network gives it an advantage that extends well beyond AI itself.

On the other, the Google camp points to raw momentum. Google Cloud's 63% growth covers both infrastructure and workspace AI products, and its forward-looking committed spend backlog nearly doubled in a single quarter. Even Devitt acknowledged that concerns about Google's Search business have largely been priced into the stock already, that Google Cloud is becoming a more important growth driver, and that revenue from its custom Tensor Processing Units could push Alphabet's valuation higher still. He sees both stocks as attractive AI plays — he just thinks Amazon's moat is wider. Not everyone agrees that wider means better when the smaller player is compounding faster.

There is a real risk embedded in each thesis. Amazon is spending at a pace that has nearly zeroed out free cash flow — AWS capital expenditure for Q1 alone ran to $43.2 billion, a 60% jump from the prior year, and free cash flow collapsed from $26 billion in Q1 2025 to $1.2 billion in Q1 2026. For Google, Devitt flagged the mirror problem: a slowdown in Google Cloud growth would hurt his investment thesis more than any renewed anxiety about Search.

Which leaves the question that actually matters, and the one no price target can settle for you:

Is Amazon the smarter AI bet because its scale, diversification, and accelerating cloud business give it more ways to win — or is Google the real play, because a faster-growing cloud plus proprietary chip economics means the upside is still being underpriced?

The models have opinions. We dropped the question into the Arena and let them fight it out. Watch below.