Amazon (NASDAQ:AMZN) stock on Wednesday hit $2T market capitalization for the first time ever, underscoring the overall dominance exerted by megacap technology stocks over Wall Street right now.
The tech and retail behemoth joins Google-parent Alphabet (GOOG)(GOOGL), iPhone-maker Apple (AAPL), OpenAI-backer Microsoft (MSFT) and chip giant Nvidia (NVDA) as the only U.S. companies to enter the $2T club.
Amazon (AMZN) stock earlier hit a record high at $194.80, and eventually closed 3.9% higher at $193.61. That gives the company a valuation of $2.01T, based on an outstanding share count of 10.41B from its latest quarterly regulatory filing.
Shares of the Seattle, Wash.-based e-commerce giant have now risen 27.4% so far this year, outperforming the nearly 15% rise in the broader S&P 500 (SP500) index.
A primary driver of Amazon’s (AMZN) advance on Wednesday was Rivian Automotive (RIVN). Class A shares of the loss-making electric vehicle startup gained about $2.75B in market capitalization after announcing plans for a joint venture with German carmaker Volkswagen (OTCPK:VLKAF). With a 17% stake, Amazon (AMZN) is currently Rivian’s (RIVN) largest shareholder.
Amazon (AMZN) has also been benefiting from rising optimism around artificial intelligence (AI) integration into its Amazon Web Services cloud computing business.
The AI craze has led to a massive rally in tech stocks, especially in the megacap names. That has led to concerns around divergence in overall market breadth and chatter over whether Big Tech is entering bubble territory.
With Amazon Web Services’ (AWS) preeminence in the cloud business and Nvidia’s (NVDA) focus on its AI chip integration with AWS cloud software, both companies have been some of the biggest beneficiaries of the optimism surrounding the AI frenzy.
Speaking of Nvidia, only a week ago, the Jensen Huang-led firm surged past Microsoft (MSFT) and Apple (AAPL) to briefly become the highest valued company in the world.
As the market for AI expands, companies like Amazon (AMZN) and Nvidia (NVDA) have tried leveraging their dominance across hardware and software services.
“This is no win-win situation, but rather, it is closer to a ‘Kiss of Death’, where both companies, while embracing one another, are actually trying to poison the other,” Seeking Alpha contributor Luca Socci said on Monday.
While AWS brings in only around 20% of Amazon’s (AMZN) revenue, it is the company’s most profitable unit, with high-growth prospects, an opinion echoed by the company and external analysts.
Looking at Seeking Alpha’s Quant ratings, AMZN is rated Hold with a score of 3.49 out of 5. It is marked highly on growth and profitability, but has a D- grade for valuation.
In comparison, Wall Street analysts rate AMZN a Strong Buy while SA Authors rate it a Buy.