Amazon’s market value topped $3 trillion for the first time on Monday, helped by a sharp rally following strong earnings and signs that the AI boom is driving fresh demand for its cloud-computing services, the company’s main profit engine.
Its shares were last up 5% at $285.01, hitting a record high. They have gained over 23% so far this year.
Last week, the shares recorded the biggest one-day jump since April 2012 after the Seattle-based e-commerce and cloud computing giant delivered its strongest cloud growth in more than four years and raised its annual capital spending forecast.
“Amazon is probably the most emblematic of the economy right now. It’s a consumer story and it’s an AI story,” said Mark Hackett, chief market strategist at Nationwide.
“The big scepticism coming into earnings season was if they (hyperscalers) were turning the spigot down on spending on AI. We did not get that from Amazon and Microsoft and that has unleashed a much broader all-clear for the market.”
Shares of other hyperscalers also climbed on Monday. Microsoft rose 4%, Meta Platforms 6%, Alphabet 3.6%, and Oracle 5%.
Microsoft said last week it expects to remain cash-generative through fiscal 2027 and forecast capital spending below Wall Street estimates, helping drive its biggest one-day share gain since 2008.
Tesla and Alphabet have, however, posted negative cash flows for the last quarter – the first time for Alphabet – while Meta saw free cash flow slump 91%, as the companies continued to pour billions into AI buildouts.
“We’re starting to see a differentiation between winners and losers in the Mag 7. They have been treated like one big company for a long time, but with last week’s moves, they’re being treated as individual companies, which is a healthy sign that balance is back,” said Hackett.
Apple, Microsoft, Alphabet and Nvidia are the other companies that have recorded a market value of $3 trillion in the past. Nvidia is currently the world’s biggest company with a market capitalization close to $5 trillion.
It took Amazon, founded by Jeff Bezos back in 1994, just over two years to add another trillion dollars to its market value after hitting a $2 trillion valuation for the first time in June 2024.
Amazon Web Services has benefited from expanding its partnerships, including cloud infrastructure and chip supply deals with OpenAI, Anthropic and Meta, among others.
