On Monday, the retail and cloud company's stock climbed as much as 5.3% by 9:35 a.m., extending last week's sharp gains after a second-quarter report showed cloud revenue growth picking up. Amazon is now the fifth business to hit a $3 trillion valuation, following Nvidia, Alphabet, Microsoft and Apple.
To understand how Amazon got here, you need to rewind a bit. For most of the previous quarter, Amazon was stuck in a prolonged decline. Businesses that had pledged multibillion-dollar AI investments fell out of favor with investors.
Then the earnings report landed. Those fears faded last week when Amazon reported that AWS's quarterly revenue growth was its fastest in about three years.
The rally returned Amazon to the leading spot among the Magnificent Seven stocks this year. This group of large technology companies has managed just a 2.1% advance this year, well behind the S&P 500's 10% gain.
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Amazon's shares have climbed well off the 17-year valuation trough reached in late March, yet the stock remains much cheaper than its historical norms. Even after the recovery, Wall Street values the shares at about 25 times projected earnings over the coming year, roughly 44% below the stock's 10-year average multiple.
Based on Bloomberg-compiled data, the consensus analyst target suggests around 14% upside from the current share price over the next year.
Much of the recent gain has been tied to AWS, the cloud unit whose revenue growth accelerated in the latest quarter. That result eased concern about heavy AI spending and helped lift Amazon out of a three-month slump. The move from $2 trillion to $3 trillion took just over two years, a far shorter stretch than the more than six years required to move from $1 trillion to $2 trillion.
Amazon's milestone comes at a time when the biggest tech names are leaning heavily on artificial-intelligence spending. The company's second-quarter results showed that those investments are translating into demand for AWS, which in turn helped push the stock past the $3 trillion mark. While the broader Magnificent Seven group has advanced only 2.1% this year, Amazon's rebound has put it at the front of that pack.
Analysts are also broadly optimistic about Amazon's long-term outlook.
That optimism is tied directly to AWS. AWS's second-quarter revenue growth picked up to a level not seen since 2021, a clear signal that the heavy AI spending across the tech industry is translating into demand for Amazon's cloud services. That mattered because investors had spent most of the previous quarter punishing companies with large AI commitments.
When AWS delivered, it eased those worries and triggered the sharp rebound.
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