Amazon vs. Alphabet: The stock one trader is betting on in the race to $1,000

  • In the race to $1,000 between Alphabet and Amazon, trader Todd Gordon makes the case for why Alphabet is his pick to get there first.
  • In order to capitalize on a move to $1,000, Gordon favors selling a put spread on Alphabet.

Tech giants Alphabet and Amazon are neck and neck in the race to $1,000 a share, with both stocks opening Monday trading between $955 and $960. But chart-minded trader Todd Gordon believes that Alphabet is likely to hit quadruple digits first.

Gordon first tackles the question by examining the "ratio" of one stock to another. Dividing the share price of Alphabet by the share price of Amazon yields an upward-moving line, "indicating the outperformance of Google relative to Amazon," he explained Monday on CNBC's "Trading Nation."

Such outperformance could suggest that Alphabet continues to be the better bet. But as Gordon also points out, the line has flattened in the last few weeks as Amazon continued to hit new highs while Alphabet has more or less consolidated.

Gordon next turns to the stock charts of both.

"What's of concern here is Amazon has already tried to make the move, and we're starting to see some hesitation," he said. "What I mean is we have three pushes [that happened over the past few weeks], and it feels like Amazon is starting to run out of momentum here."

On the other hand, the consolidation in Alphabet leads Gordon to believe that a breakout is on the way for the tech giant. "It seems to be that Google is ready to break this consolidation, push higher and probably reach $1,000," he said. "So it's just kind of the idea of Google sort of waiting for the correct time."

In order to capitalize on a move to $1,000, Gordon favors selling a put spread on Alphabet. This is an options trades that gives the trader some money immediately, and allows them to keep it so long as the stock closes above a given level upon the trade's expiration.

To be sure, not everyone is betting on Alphabet. Monday on CNBC's "Squawk Alley," Elevation Partners co-founder Roger McNamee made the case that Amazon's increasing dominance could eventually spell trouble for ad-reliant tech giants.

"Eventually they're going to be such a large percentage of the retail business that when Facebook and Google are going to try to sell ads the only guy on the other side is going to be Amazon," giving Facebook and Alphabet little pricing power, McNamee said.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more