Amazon has joined the exclusive $2 trillion club after Wall Street investors pushed the value of the e-commerce giant’s stock past that threshold.
Shares in Amazon.com Inc. finished the day up almost 4%, giving the Seattle-based company a stock market valuation of $2.01 trillion. Its stock has gained 52% in the past 12 months, partly driven by enthusiasm for the company’s investments in artificial intelligence.
Amazon now joins Google’s parent Alphabet, software behemoth Microsoft, iPhone maker Apple, and chip maker Nvidia among companies with valuations of at least $2 trillion.
Here’s what people have to say about Amazon’s massive success!
Coming for that number 1 spot ASAP
— Ashton Invests (@Ashton_1nvests) June 26, 2024
Last week, Nvidia hit $3 trillion and briefly became the most valuable company on Wall Street. Nvidia’s chips are used to power many AI applications, and its valuation has soared as a result.
Amazon has also been making big investments in AI as global interest has grown in the technology. Most of the focus has been on business-focused products, including AI models and a chatbot called Q, which Amazon makes available to businesses that use its cloud computing unit, AWS.
“A big part of the valuation boost has been cloud and AI,” said Wedbush tech analyst Dan Ives. “Amazon is going to be a major player in the AI revolution.”
In April, Amazon CEO Andy Jassy said that AI capabilities have reaccelerated AWS’ growth and that it was on pace for $100 billion in annual revenue.
The unit’s growth slowed last year as companies cut down on costs amid high inflation. Amazon has also invested $4 billion in the San Francisco-based AI company Anthropic to develop foundation models underpinning generative AI systems. In addition, Amazon makes and designs its own AI chips.
Trading at all time highs above $2T on low and decreasing revenue growth. Definitely not in a bubble at all
— Avocado Toast Capital (@AvoToastCapital) June 26, 2024
Amazon has cut costs significantly outside its cloud business since late 2022, laying off more than 27,000 corporate employees across several divisions.
It reported revenue and profits for the first quarter of the year, aided by growth in AWS as well as its core retail business and advertising.
Top 5 companies combined market cap. Just mind-blowing.
— DonPal (@DannyInvestSK) June 26, 2024
All those things are boosting investor sentiments, said Neil Saunders, the managing director at GlobalData Retail.
“Certainly, there are downsides, but these are mostly external — such as the threat from the FTC,” Saunders said, alluding to the federal agency’s antitrust lawsuit against the company. But, he said, “Investors see these clouds as a long way off so they are not dampening the current valuation.”
Amazon has also emphasized the transformative potential of AI, with CEO Andy Jassy likening its impact to that of the internet and the cloud.
He expressed optimism about the future, highlighting that AI-driven innovations will significantly enhance customer experiences and business operations. This positive outlook has resonated with investors, contributing to the stock’s strong performance.
— KaseOne (@KaseoneX) June 27, 2024
In addition to the AI investments and cost-cutting measures, Amazon’s stock has been bolstered by a broader tech rally and bullish analyst projections.
Bank of America analysts recently raised their price target for Amazon stock from $210 to $220, implying a 12% further upside for the stock and a market cap of $2.3 trillion.
One day it will reach $5 trillion
— Daniel (@danielisdizzy) June 26, 2024
This historic milestone underscores Amazon’s strategic foresight in investing in AI and cloud computing. The company’s ability to navigate market dynamics and capitalize on emerging technologies positions it for continued growth and influence in the tech industry.
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