Analysis
AWS Carries the Rally
Amazon crossed a $3 trillion market capitalization, joining Apple, Microsoft, Alphabet and Nvidia in an increasingly AI-dominated club of trillion-dollar companies, according to Yahoo Finance. The milestone followed a blistering post-earnings rally: AWS grew 37% year over year to $42.23 billion in revenue with a 39.4% operating margin, and demand for the cloud infrastructure that powers AI workloads continues to accelerate faster than Amazon can build capacity for it.
The stock did the rest. Amazon shares rose more than 15% in the week following the earnings report, adding over $550 billion in market value in a matter of days -- one of the largest single-week value creations in the company's history. It took Amazon just over two years to add this trillion dollars, after crossing $2 trillion in June 2024, a faster pace than the climb from $1 trillion to $2 trillion.
“It took Amazon just over two years to add this trillion dollars, after crossing $2 trillion in June 2024, a faster pace than the climb from $1 trillion to $2 trillion.”
The capex number is the detail worth sitting with. Amazon raised its full-year 2026 capital spending estimate from $200 billion to $220 billion, according to U.S. News, mainly because of rising AI chip costs -- and CEO Andy Jassy told investors that even at that higher level, Amazon still will not have enough capacity to meet all of 2026's demand. That is the same undersupply story every hyperscaler has told this earnings season, and it is also the number the market chose to reward rather than punish this time, in contrast to how it treated SpaceX's capex jump the same week.
The counterweight worth noting: a $3 trillion market cap prices in years of AI-driven cloud growth that has not happened yet, and Jassy's not-enough-capacity framing, while probably true, is also the standard answer any cloud provider gives to justify capex a shareholder might otherwise question. Amazon's retail and advertising segments, not AWS, still generate the majority of the company's revenue, even if AWS generates the disproportionate share of operating profit.
What to watch: whether AWS's operating margin holds near 39% as the capex-to-revenue ratio climbs, and whether Amazon discloses a split between AI-specific and general cloud capex the way investors have started demanding from every hyperscaler this earnings season.