Amazon's AI bets are paying off, with its market value quietly approaching $3 trillion.

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Amazon’s layout in the field of artificial intelligence is accelerating returns, driving a strong rebound in the company’s stock from this year’s low, with its market cap exceeding $2.9 trillion—only one step away from joining the elite global “$3 trillion club.”

Since bottoming on March 27, Amazon’s stock has surged by 36%, becoming the fourth largest contributor to the S&P 500’s 17% gain over the same period, accounting for 7.4% of the index’s rise. In April alone, the stock jumped by 27%, marking its best monthly performance since 2007. So far this year, Amazon’s market cap has increased by around $438 billion.

The core driver behind this rebound: Amazon’s cloud computing unit AWS posted its fastest quarterly revenue growth in over three years, confirming sustained strong demand for AI; the company also disclosed that its custom AI chip Trainium has secured revenue commitments totaling more than $225 billion. Wall Street’s confidence has quickly surged, with 79 out of 83 analysts tracked by Bloomberg giving Amazon a buy rating—the highest ratio among all large-cap stocks.

However, doubts remain. Amazon’s projected capital expenditure for 2026 approaches $200 billion, topping the S&P 500 component stocks. Whether massive AI spending can be converted into considerable returns remains the central unresolved issue.

AWS leads, chip demand validates AI monetization path

Amazon’s vigorous rebound reflects investors’ significantly increased confidence in its diverse AI monetization strategy.

AWS’s quarterly revenue growth reached a three-year high, indicating that enterprise cloud demand remains robust under the AI wave. Meanwhile, Trainium’s over $225 billion in revenue commitments are not only raising revenue expectations but also seen by the market as a strategic signal with profound significance.

Stephen Lee, founding partner of Logan Capital Management, said: “AWS’s growth momentum is strong, with surging demand for its custom chips not only benefiting revenue but also suggesting Amazon may gain some autonomy in computing costs, resulting in real price advantages.” Logan Capital holds Amazon stock.

Stephen Lee further pointed out that Amazon’s various business segments have strong synergistic effects; improvement in AI capabilities will benefit not only AWS but also provide huge advantages to e-commerce logistics and targeted advertising. “It is poised to be a dual winner in both AI infrastructure construction and AI application deployment. This combination is extremely attractive.”

Wall Street consensus bullish, valuation still discounted

Most analysts are bullish, and combined with upgraded earnings expectations, Amazon’s current valuation appears relatively low on its historical scale.

According to Bloomberg data, over the past month, the consensus forecast for Amazon’s 2026 earnings per share has been raised by 14%, and revenue expectations have also increased. Measured by forward P/E ratio, Amazon is currently at about 25x, significantly lower than its 10-year historical average of 46x. In late March, this ratio dropped to its lowest since the end of 2008.

Wall Street’s average target price is $313, implying about 16% upside from the current share price.

Anthropic PBC, a major holding of Amazon, is reportedly seeking a new round of funding and could be valued at more than $900 billion. In February, Amazon also struck an agreement with OpenAI, committing $50 billion in investment, while OpenAI promised to spend $100 billion on AWS over the next eight years. Stephen Lee commented:

“We are very confident that Amazon’s AI strategy is working and will continue to generate strong growth in the coming years.”

Capital expenditure remains elevated, concerns about returns limit upside

Not all investors are optimistic about Amazon’s outlook. Whether high capital spending can generate sufficient returns is the biggest uncertainty blocking further gains in the stock price.

Amazon’s 2026 capital expenditure forecast approaches $200 billion, the highest among S&P 500 component stocks. In 2027, the figure is expected to swell further to $226 billion.

Facet Chief Investment Officer Tom Graff takes a cautious stance: “There’s a massive unknown around what kind of returns will come from such large AI expenditures. As long as the capital expenditure story continues, the valuation multiple might face a ceiling—at that point, Amazon will no longer enjoy the profitability it once had as a strong cash flow generator.”

Graff admits that although Facet holds Amazon shares, he personally is skeptical about the stock, and the company has it underweighted in its portfolio. “Ultimately, I see more scenarios where it underperforms than outperforms. Too many things have to go right at the same time; the risk here is really not small when weighing it against potential returns.”

Risk Warning and DisclaimerThe market has risks, and investment should be cautious. This article does not constitute personal investment advice, nor does it take into account an individual user’s specific investment goals, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their particular situation. Invest accordingly at your own risk. ```