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 nearly 4% higher, giving the Seattle-based company a stock market valuation of $2.01 trillion. The share price is up 52% 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 chip maker Nvidia among companies with valuations of at least $2 trillion.
Last week Nvidia Reached $3 trillion and briefly became the most valuable company on Wall Street. Nvidia chips are used to power many AI applications and their valuation has skyrocketed as a result.
Amazon has also made major investments in AI as global interest in the technology has grown. Most of the focus has been on business-oriented products, including AI models and a chatbot called Q, that Amazon makes available to companies that are cloud computing unit AWS.
“Much of the valuation boost comes from 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 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 at San Francisco-based AI company Anthropic to develop so-called basic 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 sales and profits for the first quarter of the year, driven by growth in 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 – like the threat of the FTC,” Saunders said, referring federal agency’s antitrust lawsuit against the company.
But, he said, “investors see these clouds as far away, so they are not dampening the current valuation.”