Amazon Hits $2 Trillion, Driven by AI and Cloud Growth
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On 26th June, Amazon.com Inc reached a $2 trillion market value, joining the ranks of the fifth US company to achieve this milestone. The surge reflects investor enthusiasm for technology-related stocks, particularly driven by optimism surrounding artificial intelligence and expectations of potential interest rate cuts. Amazon's stock rose 3.9% to $193.61 at closing, surpassing the $2 trillion market cap threshold. This achievement places Amazon alongside technology giants such as Microsoft Corp, Apple Inc, Nvidia Corp, and Alphabet.
U.S. stock indexes have seen significant gains this year, driven by strong enthusiasm for artificial intelligence, optimism about the resilience of the U.S. economy, and expectations of potential interest rate cuts from the Federal Reserve.
Wall Street is trading near record levels, fueled largely by megacap stocks like Nvidia and Amazon. These companies stand to benefit from lower interest rates due to anticipated future cash flows.
Amazon, which joined the blue-chip Dow Jones Industrial Average in February. The company's shares have surged nearly 30% year-to-date. In April, the company's Amazon Web Services division announced a 17% increase in sales year-over-year, reaching $25 billion in the first quarter. has seen its shares rise over 26% this year. In February, it became the fifth largest U.S. company by market value following Nvidia's upward movement.
In March, Amazon made its largest-ever investment in an external company by adding $2.75 billion to its initial $1.25 billion investment in AI startup Anthropic. Anthropic uses Amazon Web Services (AWS) as its primary cloud platform for AI safety research and model development. Amazon has also committed to Anthropic utilizing AWS’s AI chips, Trainium and Inferentia, for building, training, and deploying future models.
Amazon chief executive Andy Jassy highlighted in his annual shareholder letter in April that AWS is poised to play a crucial role in the generative AI revolution. He emphasized that generative AI could be as transformative as cloud computing and the Internet itself, expressing optimism about the potential to enhance customer experiences significantly.
Additionally, Amazon is reportedly developing an AI chatbot named "Metis" internally to compete with OpenAI's ChatGPT. According to Business Insider, Metis will be accessible via web browsers and powered by Amazon's internal AI model, Olympus.
Brian Olsavsky, Amazon's CFO since 2015 and a veteran of 22 years with the company, emphasized during the April earnings call that Amazon remains committed to driving operational efficiencies to fuel the momentum of AWS, including investments in generative AI. He noted that the company views generative AI and the broader cloud space as still being in the early stages, presenting substantial growth opportunities.
In line with its long-term AI investment strategy, Amazon has undertaken significant cost-cutting measures and organizational restructuring. Between November 2022 and March 2023, the company implemented multiple rounds of layoffs, resulting in a total reduction of 27,000 employees. In May, Amazon reportedly laid off more than 100 customer service managers in Level 5 and Level 6 middle management positions across call centers and virtual teams, as reported by Del Rey. This restructuring has affected various divisions including AWS, Prime Video, and Twitch, all of which have also seen hundreds of job cuts this year.
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