Amazon's market capitalization crossed the $3 trillion threshold for the first time on Monday, propelled by a nearly 5% stock surge after its cloud division, Amazon Web Services (AWS), delivered its strongest revenue growth in over four years. The milestone underscores investors' growing confidence that the company's massive AI infrastructure spending is beginning to yield tangible returns, reversing a three-month selloff that had dragged shares down 18% from their May peak.
AWS reported quarterly revenue of $42.2 billion, a 37% jump that far exceeded Wall Street's 31% estimate, while generating roughly 61% of Amazon's total operating profit. CEO Andy Jassy announced that the company's AI and chips businesses each surpassed run rates of more than $25 billion, with AWS now generating an annualized revenue of $169 billion. JPMorgan analysts noted a strong correlation between core AWS growth and AI revenue, expecting further acceleration as AI workloads move into full-scale production.
Portfolio manager Dan Morgan of Synovus Trust highlighted that earlier concerns about AWS losing market share had been dispelled, adding that "the AI tide is lifting all boats." Amazon joins Apple, Microsoft, Alphabet, and Nvidia in the exclusive $3 trillion club. Unlike Tesla, Alphabet, and Meta—whose heavy AI spending weighed on free cash flow—Amazon and Microsoft have been broadly rewarded by investors. Despite the rally, Amazon's valuation remains about 44% below its 10-year average, trading at roughly 25 times forward earnings.
