Among the Magnificent 7, there is another stock ready to enter the $2 trillion market value club: it is Amazon. Let’s analyze its strengths.
Another stock from the Magnificent 7 is about to enter the club of 2,000 billion dollars in market capitalization: it is Amazon.
So far there are only four companies in the world with a market cap of this size: Microsoft, Apple, Nvidia, and Alphabet. While Microsoft and Apple have been valued at $2 trillion for the longest, Nvidia reached the milestone earlier this year. Alphabet was brought into the club after an impressive first-quarter earnings report a few weeks ago.
The e-commerce and cloud computing giant Amazon currently boasts a market capitalization of 1.9 trillion dollars. According to the analysis of financial expert Adam Spatacco, the $2 trillion milestone is close to being surpassed for several reasons.
Why Amazon is about to surpass $2 trillion in market cap
The potential of Bezos’ giant is diverse and now goes beyond e-commerce. Over the last two decades, the giant has undoubtedly become the world’s favorite platform for online shopping. It’s no surprise that this business is consistently Amazon’s main source of revenue.
However, another area the company has helped pioneer is cloud computing. Indeed, Microsoft, Alphabet, Oracle and many other tech titans all operate in the highly competitive cloud realm.
Similar to its e-commerce venture, however, Amazon has made significant investments over many years, which has helped the company build the largest cloud platform on the market today.
For the quarter ending March 31, Amazon generated 17% growth year-over-year from its cloud division, reaching $25 billion. Amazon Web Services (AWS) now officially has $100 billion in revenue and is the company’s third largest business.
One of the most important investments Amazon has made to spur some acceleration in the cloud business is in generative artificial intelligence. Last September, the company invested $4 billion in a start-up called Anthropic.
Anthropic uses AWS as its primary cloud provider and is training its AI models on Amazon’s in-house Trainium and Inferentia graphics processing units (GPUs). These moves are critical for Amazon to maintain its leadership among cloud infrastructure providers.
According to the expert, not only is the giant’s revenue accelerating, but the company’s financial flexibility is truly astounding. Over the past 12 months, Amazon generated $50 billion in free cash flow.
In addition to Anthropic and home-grown semiconductor chips, Amazon recently announced an $11 billion investment to build data centers.
Over the past year, Amazon shares have risen 56%, easily outpacing the S&P 500 Index and the Nasdaq Composite. With shares nearing all-time highs, it’s fair to say that Amazon’s valuation has become a bit overblown according to the analyst. But even so, with a price-to-sales (P/S) ratio of 3.3, Amazon stock looks like a good buy right now relative to historical levels.
|DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.|
Original article published on Money.it Italy 2024-05-29 15:10:39. Original title: Questo titolo dei Magnifici 7 raggiungerà presto i $2.000 mld (valore di mercato)
