Amazon Joins the Exclusive $2 Trillion ClubAmazon Joins the Exclusive $2 Trillion Club On Wednesday, Amazon joined an elite group of companies with market valuations exceeding $2 trillion. Wall Street investors drove Amazon’s stock price up nearly 4%, resulting in a market capitalization of $2.01 trillion. The stock price surge has been driven by the company’s investments in artificial intelligence (AI). AI Fuels Amazon’s Growth Amazon has made significant investments in AI, particularly in enterprise-focused products. These include AI models and a chatbot named Q, which is offered to businesses through its AWS cloud computing service. Cloud and AI Drive Valuation Wedbush technology analyst Dan Ives attributed much of Amazon’s valuation growth to its cloud and AI capabilities. He believes Amazon will play a major role in the upcoming AI revolution. AWS Revenue Targets In April, Amazon CEO Andy Jassy stated that AI capabilities had fueled AWS growth and that the unit was on track to reach $100 billion in annual revenue. Other AI Investments Amazon has also invested in Anthropic, a San Francisco-based AI company, to develop foundational models for generative AI systems. Additionally, the company manufactures its own AI chips. Cost-Cutting Measures In addition to its AI investments, Amazon has undertaken extensive cost-cutting measures since late 2022, laying off over 27,000 employees. These cuts have helped improve the company’s financial performance. Investor Sentiment Neil Saunders, managing director of GlobalData Retail, attributes investor sentiment to Amazon’s strong revenue and profit performance in the first quarter, driven by AWS and its retail and advertising businesses. He noted that despite potential external threats, such as antitrust concerns from the FTC, these factors are not currently dampening Amazon’s valuation.
NEW YORK – Amazon joined the exclusive $2 trillion club on Wednesday after Wall Street investors pushed the value of the e-commerce giant’s stock past that threshold.
Shares of Amazon.com Inc. ended the day up nearly 4 percent, giving the Seattle-based company a stock market valuation of $2.01 trillion. The share price is up 52 percent in the past twelve months, driven in part by enthusiasm for the company’s investments in artificial intelligence.
Amazon now joins Google’s parent company Alphabet, software giant Microsoft, iPhone maker Apple and chipmaker Nvidia among companies with valuations of at least $2 trillion.
Last week, Nvidia hit $3 trillion, briefly becoming the most valuable company on Wall Street. Nvidia’s chips are used to power many artificial intelligence (AI) applications and their valuation has soared as a result.
Amazon has also made major investments in AI as global interest in the technology has grown. Most of the attention has been on enterprise-focused products, including AI models and a chatbot called Q, which Amazon makes available to companies using its cloud computing unit AWS.
“A lot of the valuation growth has come from cloud and AI,” said Wedbush technology analyst Dan Ives. “Amazon will be a major player in the AI revolution.”
In April, Amazon CEO Andy Jassy said AI capabilities had once again accelerated AWS’s growth and that the company was on track to reach $100 billion in annual revenue. Unit growth slowed last year as companies cut costs due to high inflation.
Amazon has also invested $4 billion in San Francisco-based AI company Anthropic to develop so-called foundational models that support generative AI systems. In addition, Amazon makes and designs its own AI chips.
Outside of its cloud business, Amazon has significantly cut costs since late 2022, laying off more than 27,000 corporate employees across divisions. It reported revenue and profit for the first quarter of the year, helped by the growth of AWS and its core retail and advertising businesses. All these things are driving investor sentiment, says Neil Saunders, managing director of GlobalData Retail.
“Certainly there are downsides, but they are mostly external – such as the threat from the FTC,” Saunders said, referring to the federal agency’s antitrust case against the company.
But, he said, “investors still see these clouds far away, so they are not dampening the current valuation.”
