NEW YORK (AP) — Amazon reached a major milestone on Wednesday as its stock market value surpassed $2 trillion, joining a select group of companies with such high valuations. The e-commerce giant's stock rose nearly 4% by the end of the day, giving it a market valuation of $2.01 trillion. Over the past year, Amazon's stock has seen a 52% increase, driven in part by investor enthusiasm for the company's investments in artificial intelligence.
Amazon now joins the ranks of Google's parent Alphabet, Microsoft, Apple, and Nvidia as companies with valuations exceeding $2 trillion. Just last week, Nvidia surpassed $3 trillion briefly becoming the most valuable company on Wall Street, thanks to the demand for its chips used in AI applications.
Amazon has also been actively investing in AI technology to meet the growing global demand. The focus has mostly been on business-centric products, including AI models and a chatbot named Q, which is available to businesses using Amazon's cloud computing unit, AWS.
"A significant part of Amazon's valuation growth can be attributed to its cloud and AI businesses," said Wedbush tech analyst Dan Ives. "Amazon is poised to play a major role in the AI revolution."
In April, Amazon CEO Andy Jassy highlighted how AI capabilities have driven AWS growth, with the unit on track to hit $100 billion in annual revenue. Despite a slowdown in growth last year due to cost-cutting measures amid high inflation, Amazon remains optimistic about its future.
Amazon has also made strategic investments, such as the $4 billion investment in the AI company Anthropic to develop foundation models for generative AI systems. Additionally, Amazon has developed its own AI chips to enhance its offerings.
While Amazon has faced challenges, such as layoffs and the FTC's antitrust lawsuit, the company's strong financial performance in the first quarter of the year has bolstered investor confidence. Neil Saunders, managing director at GlobalData Retail, noted that the positive growth in AWS, retail business, and advertising has contributed to investors' optimistic outlook on Amazon's future.
Despite external threats, investors remain optimistic about Amazon's future prospects, contributing to its current high valuation.
