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Amazon Joins $3 Trillion Club on Surging AWS Growth and AI Bets
Amazon.com Inc. (AMZN) saw its market capitalization surpass $3 trillion on Monday, as a stellar second-quarter earnings report fueled investor optimism about the company's dominance in cloud computing and its aggressive push into artificial intelligence.
Shares in the e-commerce and technology company surged 5% in morning trading, reaching a new 52-week high of $287.20 and placing it among an elite group of the world's most valuable public companies.
Earnings Propel Rally
The rally was driven by quarterly results that significantly outpaced market expectations. Amazon reported second-quarter revenue of $200.6 billion, a 20% increase from the same period a year earlier. The primary growth engine was its cloud-computing division, Amazon Web Services (AWS).
AWS delivered a standout performance, with several key metrics underscoring its accelerating momentum:
- Revenue Growth: Revenue jumped 36.7% year-over-year, its fastest pace of expansion in 18 quarters.
- Run Rate: The division is now operating at an annualized revenue run rate of $169 billion.
- Backlog: Its contract backlog swelled to $496 billion, signaling strong future demand.
Wall Street's Bullish Reaction
AdFollowing the report, several Wall Street firms raised their price targets on Amazon's stock, including Morgan Stanley, RBC Capital, Roth Capital, and Telsey Advisory. Analysts pointed to the accelerating demand for cloud services and the early signs of successful monetization from generative AI products.
Analysts at BNP Paribas reiterated their bullish outlook, suggesting a long-term trajectory where AWS could achieve a $1 trillion valuation as a standalone entity. The strong results from AWS helped ease broader market concerns about the return on capital for heavy AI infrastructure investments.
AI Strategy and Market Impact
Cementing its commitment to the AI race, Amazon also disclosed a $35 billion investment commitment to OpenAI, according to the report. This move signals an aggressive, capital-intensive strategy to deepen its footprint in the AI ecosystem.
The positive sentiment surrounding Amazon's performance lifted other technology giants. Shares of fellow cloud providers Microsoft Corp. and Alphabet Inc. gained 5% and 4.6%, respectively, in morning trading.
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