On Wednesday, Amazon shares closed at $193.61, meaning the company is now valued at over $2 trillion for the first time. This achievement puts it in an elite club which consists of Nvidia, Apple, Alphabet, and Microsoft.
Like many of those other companies, Amazon has jumped on the artificial intelligence (AI) bandwagon which has caused investors to pile in. Amazon hasn"t done much in terms of customer-facing generative AI like Microsoft and Google. Still, it offers backend products like Amazon Bedrock which allows third-party developers to integrate various generative AI models in their products to enhance the experience for users.
Most recently, Amazon Bedrock added support for Anthropic"s latest Claude 3.5 Sonnet model. With the improvements in that model, it is easily one of the best on the market, beating Claude 3 Opus, GPT-4o, and Gemini 1.5 Pro in most benchmarks.
Another reason investors like Amazon is because of its Amazon Web Services (AWS) business which has recently come back from a slowdown, according to CNBC. The company has also announced a spate of expansions of its data centres to meet the demand for generative AI, including a huge €15.7 billion investment in Aragon, Spain, which will help to create 17,500 full-time-equivalent jobs in the local economy.
Furthermore, Amazon has not been shy to cut tens of thousands of employees after discovering that it overextended itself while business was booming during the pandemic. A bit perversely, investors think this is good for companies in some cases as it means that costs for the company go down and it gets more financially stable.
While Amazon may have passed this impressive milestone, it doesn"t mean it won"t fall back below this in the future. Over the last week, Nvidia"s market cap collapsed by $550 billion before recovering some of the lost value. This can just as easily happen to Amazon.
Source: CNBC