In a significant development, Amazon is poised to join the elite $2 trillion club alongside tech giants Microsoft, Apple, Nvidia, and Alphabet. With its innovative AI investments, robust cloud infrastructure, and impressive cash flow, Amazon’s trajectory shows no signs of slowing down.
Amazon’s cloud division, Amazon Web Services (AWS), generated $25 billion in revenue for the quarter ended March 31, representing a 17% year-over-year growth. This puts AWS on a $100 billion revenue run rate, making it the company’s third-largest business.
To maintain its leadership position among cloud infrastructure providers, Amazon has made strategic investments in generative AI. Last September, the company invested $4 billion in the start-up Anthropic, which is using AWS as its primary cloud provider and training its AI models on Amazon’s in-house Trainium and Inferentia graphics processing units (GPUs).
“The inclusion of Anthropic in the AWS ecosystem is expected to accelerate the sales of new AI-powered products, such as Amazon Bedrock,” said an Amazon spokesperson.
Amazon’s investment in generative AI
Over the last 12 months, Amazon has generated $50 billion of free cash flow.
Despite its significant investments in AI, data centers, and semiconductor chips, the company ended the first quarter with $85 billion of cash on the balance sheet. Historically, Amazon has proven to be excellent at allocating capital, building best-in-class e-commerce and cloud computing technologies.
As these businesses have scaled, Amazon has achieved consistent and robust profits. Over the last year, shares of Amazon have risen 56%, outperforming the Nasdaq Composite.
At a price-to-sales ratio of 3.3, Amazon stock looks attractive compared to historical levels, considering the company’s progress in the cloud and soaring profitability metrics. With its emergence as a leader in AI and accelerating sales and cash flow, now might be the perfect time to invest in Amazon for the long run, as it aims for the $2 trillion mark and beyond.
