Amazon.com Inc. reached market value of $2 trillion for the first time on Wednesday. Amazon became the fifth U.S. company to surpass that level of market value as optimism around artificial intelligence and potential interest rate cuts this year drove demand for technology-related stocks.
Amazon share price rose to $192.70 up by around 3.4%, giving the e-commerce giant a market value of over $2 trillion. This valuation puts Amazon in the same club as technology heavyweights Microsoft Corp, Apple Inc., Nvidia Corp and Alphabet.
Amazon stock rally
Amazon shares have whipsawed since the company’s Q1 earnings, when the cloud unit posted the strongest sales growth in a year. This helped the Amazon stock back above the all-time high set in April. The stock rallied in June, recovering losses from the end of May to gain about 27% so far this year.
Amazon.com Inc.’s rally pushed the tech giant deeper into record territory.
Amazon market value
The company is now a member of an elite club of a handful of peers that have surpassed the key market capitalization. Alphabet Inc. passed the $2 trillion threshold in late April, while rallies have pushed market values of Nvidia Corp., Microsoft Corp. and Apple Inc. to more than $3 trillion.
AI optimism
U.S. stock indexes have recorded robust gains this year on relentless enthusiasm around AI, optimism around resilience in the U.S. economy and potential easing of interest rates from the Federal Reserve.
Wall Street was trading near record levels, largely powered by megacap stocks such as Nvidia and Amazon, whose future cash flows stand to benefit from lower interest rates.
“Part of the good stock performance over the last six to nine months for Amazon has been related to the fact that it was oversold” at the end of 2022, said Dan Romanoff, an analyst at Morningstar Investment Service.
Amazon fifth biggest U.S. company
Shares of Amazon, which were added to the blue-chip Dow Jones Industrial Average index in February, have climbed over 26% this year. The company became the fifth biggest U.S. company by market value in February after Nvidia went up a spot.
Amazon Web Services is the largest cloud services provider in the world, and growth at the Amazon unit has returned after a dip in the past year, thanks to surging adoption of AI technologies.
The company has also invested in AI startup Anthropic and robotics firm Figure as it looks to capitalize on the AI boom.
Late last year, Amazon unveiled a new generation of custom-designed chips used in data centers, targeting applications for machine-learning training and generative artificial intelligence.
Amazon stock
Amazon shares rose as much as 3.6% to a price of $192.70 on Wednesday.
