Amazon joins club of companies worth over $3 trillion on AI and cloud demand

Amazon's market capitalization hit $3 trillion for the first time, fueled by a sharp rally after strong financial results and evidence that the AI boom is driving demand for its cloud services, a major revenue source. Shares rose 5% to $285.01, an all-time high, and are up more than 23% since the start of the year. Last week, Amazon posted its biggest one-day stock gain since April 2012, helped by a strong earnings report showing the fastest growth in its cloud business in over four years. Consequently, Amazon raised its capital expenditure forecast for the current year. Chief market strategist at Nationwide, Mark Hackett, commented that Amazon is perhaps the clearest reflection of the economy, being both a consumer story and an AI story; the main skeptical expectation was whether IT giants would cut AI spending, but neither Amazon nor Microsoft did, sending a 'all clear' signal to the market. Other major AI players also saw gains: Microsoft rose 4%, Meta Platforms 6%, Alphabet 3.6%, and Oracle 3%. Microsoft last week said it expects positive free cash flow through fiscal year 2027 and forecast capital expenditures below Wall Street estimates, helping its shares post their biggest one-day gain since 2008. In contrast, Tesla and Alphabet reported negative quarterly cash flow, with Alphabet experiencing its first such case, and Meta's free cash flow fell 91% due to continued multi-billion-dollar investments in AI infrastructure. Apple, Microsoft, Alphabet, and Nvidia had previously reached $3 trillion market caps; Nvidia is now the world's largest company with a valuation near $5 trillion. Amazon, founded in 1994, took just over two years to add $1 trillion to its market value after first reaching $2 trillion in June 2024.