Amazon enters $3T club as AI optimism sweeps through Wall Street

Aug 3 (Reuters) – 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 5.5% at $286.20, hitting a record high and taking their yearly gains to over 23%.

The Seattle-based e-commerce and cloud computing giant’s stock surged 15% on Friday after it delivered its strongest cloud growth in more than four years and raised its annual capital spending forecast.

Amazon and Microsoft are the only two of the “Magnificent Seven” companies, out of the six that have reported so far, whose AI spending has paid off in investors’ eyes. Tesla, Alphabet and Meta were punished as their massive spending plans hit free cash flow last quarter.

Along with other tech giants on Wall Street, Amazon has been pouring billions to build out its AI infrastructure. It disclosed a new investment in Anthropic in April, which follows Amazon’s announcement earlier this year that it would invest up to $50 billion in OpenAI.

It took just over two years for the company, founded by Jeff Bezos back in 1994, to add another trillion dollars to its market value after hitting a $2 trillion valuation for the first time in June 2024.

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.

(Reporting by Shashwat Chauhan and Purvi Agarwal in Bengaluru; Editing by Devika Symnath and Shinjini Ganguli)