Amazon joins $2 trillion club driven by AI investments

E-commerce giant saw a 52% increase in stocks over the past year

Amazon joins $2 trillion club driven by AI investments

Amazon achieved a significant milestone on Wednesday, joining the elite $2 trillion club in market valuation. The Seattle-based e-commerce giant saw its stock rise nearly 4 per cent, closing at a valuation of $2.01 trillion. This surge reflects a 52 per cent increase in Amazon’s stock over the past year, driven partly by investor optimism surrounding its investments in artificial intelligence (AI).

The Canadian Press noted that with this Amazon now stands alongside tech giants like Alphabet, Microsoft, Apple, and Nvidia with valuations exceeding $2 trillion. Nvidia briefly surpassed $3 trillion recently, buoyed by its leadership in AI-driven technologies, a sector where Amazon is also making substantial strides.

Analysts attribute Amazon’s recent valuation growth to its significant investments in AI and cloud computing. According to Dan Ives, a tech analyst at Wedbush, “A big part of the valuation boost [for Amazon] has been cloud and AI. Amazon is going to be a major player in the AI revolution.”

CEO Andy Jassy emphasized the importance of AI in Amazon Web Services (AWS), noting its role in revitalizing AWS’s growth trajectory towards an annual revenue target of $100 billion. Amazon’s strategic investments include a $4 billion commitment to Anthropic, a San Francisco-based AI firm focusing on foundational AI models.

Despite regulatory challenges, including an antitrust lawsuit from the Federal Trade Commission, Amazon continues to bolster investor confidence through sustained revenue and profit growth. Neil Saunders, managing director at GlobalData Retail, observed that investors are optimistic about Amazon’s future despite regulatory concerns not immediately impacting its valuation.”

“Certainly, there are downsides, but these are mostly external,” Saunders said.

Amazon has aggressively reduced expenses since late 2022, resulting in layoffs of over 27,000 corporate employees across various divisions. The company’s revenue and profits for the first quarter of the year were bolstered by expansions in AWS, alongside robust performance in its core retail operations and advertising sectors.