AWS's strong growth boosts market confidence. Amazon.com, Inc. (AMZN.US) has surpassed a market capitalization of $3 trillion for the first time, leading the stock performance among the "Big Seven" this year.

Driven by strong growth in its cloud computing business, Amazon.com, Inc. (AMZN.US) saw its stock price continue to rise on Monday, jumping as much as 5.3% during the trading session. The company's market capitalization surpassed $3 trillion for the first time in history, making it the fifth publicly traded company to join the $3 trillion market cap club, following NVIDIA Corporation (NVDA.US), Alphabet (GOOGL.US), Microsoft Corporation (MSFT.US), and Apple Inc. (AAPL.US). This breakthrough continued the strong upward momentum following Amazon.com, Inc.'s earnings report. The companys second-quarter results showed that its cloud computing business, AWS, reported a year-on-year revenue growth of 37%, marking the fastest growth since 2021 and alleviating market concerns regarding the return on massive capital expenditures in AI. As a result of this boost, Amazon.com, Inc.s stock surged over 15% on the first trading day after the earnings release, representing the largest single-day gain in over 14 years, and the company added nearly $400 billion to its market value in a single day, pushing it to become the strongest performer among this years "Seven Giants." Over the previous three months, Amazon.com, Inc.s stock faced pressure as concerns grew about the profitability of large tech companies heavily investing in AI infrastructure, causing a decline of nearly 18% since reaching an all-time high on May 6, and touching a three-month low last month. However, the better-than-expected growth of AWS reassured investors about the company's ongoing commitment to strengthening its AI infrastructure, resulting in a noticeable improvement in market sentiment. Despite the recent rebound in stock price, Amazon.com, Inc.s current valuation remains relatively low historically. Based on the expected price-to-earnings ratio for the next 12 months, the company is currently valued at about 25 times earnings, which is approximately 44% lower than its average valuation level over the past decade, indicating that the market remains cautious about its valuation. Notably, it took Amazon.com, Inc. about two years to go from breaking the $2 trillion market cap in June 2024 to surpassing the $3 trillion mark, a pace much faster than the over six years it took for the company to grow from $1 trillion to $2 trillion at the end of 2018. Wall Street remains optimistic about Amazon.com, Inc.s long-term development prospects. According to data, analysts currently forecast an average target price that indicates about a 14% upside potential from the latest stock price, reflecting a general belief in the continued growth potential of the companys cloud computing and artificial intelligence businesses.