Amazon surpasses $2 trillion in market capitalisation

After an extraordinary progression, Amazon has, for the first time in its history, surpassed $2 trillion in market capitalization in a context where the tech sector seems even more driven by the interest generated by artificial intelligence.

As we write this article, with the markets closed, Amazon’s shares are trading at $197.85 (pre-market at $198.60), with a market cap that has grown even further from the record reached. With these premises, on the eve of its new Prime Day, Amazon joins Microsoft, Apple, Nvidia, and Alphabet in the exclusive and prestigious group of companies with a market capitalization exceeding $2 trillion.

Of course, the company founded by Jeff Bezos and led by Andy Jassy has a way to go to break absolute records. So far, the podium of the most capitalized companies is composed as follows:

1. Microsoft ($3.36 trillion)
2. Apple ($3.26 trillion)
3. Nvidia ($3.10 trillion)

If the top three giants seem unreachable for the moment, Alphabet’s position ($2.28 trillion), the holding company that owns Google, is certainly closer.

Why has Amazon broken a new record?

Here are some quantitative data that help us understand the renewed market appeal of the American giant. Regarding the factors that have driven Amazon’s shares to grow nearly 30% in the first half of 2024 alone, it is worth noting that much of the credit must still be attributed to the AWS business. Its revenues have grown 17% year over year to $25 billion in just the first quarter.

The importance of Amazon’s role in artificial intelligence cannot be overlooked. While Microsoft has had the merit of betting on OpenAI, the company led by CEO Jassy has chosen Anthropic, in which it has invested $4 billion, and Figure, a robotics company. Even more relevant is the commitment to developing a new generation of chips designed for data centers. The hardware will be intended for applications in machine learning and generative artificial intelligence training. Its new chatbot, codenamed Metis, is expected this fall.

Shareholders have also rewarded the company’s bold decisions regarding economic efficiency. Amazon has progressively reduced its workforce by 27,000 employees. Despite this reduction, it remains the second-largest company by the number of employees among those with the highest capitalization.

The latest quarterly report

In the latest quarterly report (downloadable here in PDF), Amazon’s main record-breaking numbers were as follows:

• Revenue growth of 13% to $143.3 billion (from $127.4 billion year-over-year);
• Operating income of $15.3 billion (from $4.8 billion year-over-year);
• Net income of $10.4 billion.
• Cash flow of $99.1 billion (+82% year-over-year);
• Free cash flow of $50.1 billion (from -$3.3 billion year-over-year).