Amazon’s market capitalization has hit a new high after exceeding $2 trillion. The company’s stock price went up by 3.9% to $193.6, hitting an all-time high and ranking it at fifth position in the trillion-dollar club.
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Over the last year, Amazon’s stock ($AMZN) has increased by 52% due to the firm’s adoption of the growing AI sector. Currently, its market cap sits at $2 trillion, with Microsoft at the very top with a market cap of $3.366 trillion. Just one step ahead of Amazon is Google’s Alphabet, with a $2.282 trillion market cap.
Amazon $AMZN has officially hit the $2 trillion market cap milestone for the first time ever pic.twitter.com/RGmT16EWMz
— Wall St Engine (@wallstengine) June 26, 2024
AI-powered products boost AWS revenue
The Seattle-based company has been concentrating on business-specific AI products, including an AI model and a chatbot named Q, which are incorporated into its AWS arm.
According to market research firm Synergy, the cloud services market reached a record $76 billion in Q1 of this year; AWS, Microsoft Azure, and Google Cloud lead the market. AWS has the largest market share at 31%, followed by Microsoft Azure at 25% and Google Cloud at 10%.
Also Read: Meta AI expands to India amidst growing AI competition
An increase in its market cap has been accelerated by the rising need for AI, higher business expenditure on cloud solutions, and certain cost management strategies. In the first quarter, the division generated revenue of $25 billion, which is 17% higher than the same quarter of the previous year, while the expected revenue stood at $24. 5 billion.
“Our AWS customers are excited about leveraging generative AI to change their customer experiences and businesses. We see considerable momentum on the AI front.”
Amazon chief executive Andy Jassy
AWS alone generated 62% of Amazon’s total operating profit, with an operating income of 9.4 billion dollars, two times more than the preceding year. Furthermore, the cloud business contributed 17% of Amazon’s total revenues and had an operating margin of 38%.
Cloud market competition intensifies as tech giants vie for dominance
The market competition in cloud services continues to be tight, with Amazon’s AWS competing with other big players like Microsoft Azure and Google Cloud by Alphabet. Microsoft’s dominance in the AI space, especially with the release of ChatGPT, has compelled other tech companies to expedite their AI innovation and implementation on their cloud platforms.
The recent partnership between Amazon and Nvidia is a notable example. According to the announcement, this partnership will rely on Nvidia’s experience in AI chip sales, which has seen Nvidia’s market capitalization soar by over $3 trillion this year.
Also Read: AI to drive financial industry profits to $2 trillion by 2028
Amazon has also taken several cost reduction measures since late 2022. The company has dismissed more than 27,000 corporate workers in various departments in order to optimize its business processes.
AWS, the core retail business, and advertising have been instrumental in providing an optimistic financial projection. Amazon is reportedly planning to enter the AI space with a new AI chatbot codenamed ‘Metis,’ which will be a direct competitor to OpenAI’s ChatGPT.
Cryptopolitan Reporting by Brenda Kanana
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