Hamilton has refused to deny reports of him meeting with Ferrari president John Elkann twice in 2019, while team principal Mattia Binotto and Charles Leclerc have both made noises potentially welcoming the six-time world champion to Maranello.
Having teamed with Hamilton at McLaren before going on to join the Scuderia, Alonso is in a unique position to judge the situation from many sides.
Asked if Hamilton should move to Ferrari, Alonso told Channel 4: "That's a very good question, but I think it's also a very personal answer.
"He has to consider all the situations and ingredients that will be in the mix and make the decision. I think it is very personal."
Asked how he would handle the situation, Alonso said: "I don't know. I think there will be some loyalty probably to put in place with Mercedes as well, for all the achievements they've had together.
"Also I don't know what Mercedes are thinking as well for 2021."
Alonso said that Hamilton is likely now at "the same level at least" as F1 icon Michael Schumacher, having secured a sixth world title in 2019.
"It's amazing what he is doing in F1 right now. I think the combination between the team and himself is very dominant," Alonso said.
"I think this championship was quite difficult for him. Ferrari was strong and so too were Red Bull for some parts of the season."
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