Amazon Joins the $3 Trillion Club as AWS Chief Says AI Demand Is Outstripping Supply

Amazon shares extended their post-earnings rally on Monday, climbing 4.6% to a record closing price of $284.02 and lifting the company’s market capitalization above $3 trillion for the first time.

The milestone makes Amazon the fifth publicly traded company to achieve a valuation of at least $3 trillion, following Nvidia, Apple, Microsoft and Google parent Alphabet. Amazon’s latest advance was driven largely by renewed confidence in Amazon Web Services, whose accelerating growth has eased concerns about the company’s enormous artificial intelligence investments.

Amazon Adds Nearly $400 Billion in a Single Session

Monday’s gain continued the powerful rally that followed Amazon’s second-quarter results. The stock jumped more than 15% on Friday, its largest one-day increase since 2012, adding close to $400 billion to the company’s market value.

Amazon shares have now gained approximately 23% since the beginning of 2026, putting the company at the top of the Magnificent Seven technology stocks for the year. The rally marks a sharp reversal from the previous several months, when doubts about AI capital spending weighed heavily on the stock.

After reaching a record high on May 6, Amazon shares declined nearly 18% before hitting a recent low in July. Investors had questioned whether the billions of dollars committed to data centers, processors and other AI infrastructure would produce sufficient revenue and profit.

Those concerns diminished after the company reported its fastest AWS revenue growth in more than four years.

AWS Revenue Growth Reaches Its Fastest Pace Since 2021

Second-quarter AWS revenue increased approximately 37% year over year to $42.2 billion, compared with analysts’ expectations for growth of about 31%. That was the cloud division’s strongest expansion in 18 quarters and a significant acceleration from the 28% growth recorded in the previous quarter.

AWS now operates at an annualized revenue rate of roughly $169 billion. Although the division generated about 21% of Amazon’s total quarterly revenue, it contributed approximately 61% of the group’s operating profit, underscoring its importance to the company’s overall earnings.

The results provided investors with stronger evidence that Amazon’s AI infrastructure spending is translating into commercial demand. The company raised its 2026 capital expenditure forecast from $200 billion to approximately $220 billion, with most of the additional investment expected to support AI chips, cloud infrastructure and new data centers.

Amazon nevertheless continues to face physical capacity constraints. Despite the higher spending plan, management expects customer demand to remain greater than the computing resources currently available.

Five-Year Contracts Give AWS Greater Demand Visibility

AWS Chief Executive Matt Garman said companies are continuing to use large computing clusters to train increasingly sophisticated AI models. At the same time, more enterprises are incorporating AI inference—the process of running trained models to generate answers or complete tasks—into their everyday operations.

This transition is important for AWS because inference can create recurring cloud demand whenever an AI application is used, rather than concentrating spending primarily around the initial training process.

Garman described Amazon’s potential AI opportunity as exceptionally large, although he declined to provide a specific capital spending forecast for next year.

To anticipate future data-center usage, AWS is signing long-term agreements with customers. Some clients are making five-year commitments to secure computing capacity as Amazon builds new infrastructure.

Garman said demand remains well above available supply and that AWS is trying to accelerate construction and investment to keep pace. Some of the company’s computing capacity has reportedly already been committed through 2027 and into 2028.

Long-term contracts provide Amazon with greater visibility into future revenue while reducing the risk of constructing costly data centers without sufficient customer demand. However, the strategy also requires the company to spend heavily before much of the contracted capacity becomes operational.

Amazon’s Climb From $2 Trillion Accelerates

Amazon first touched a $1 trillion market value in 2018 and closed above that threshold in 2020. It surpassed $2 trillion in June 2024, more than six years after initially reaching the first milestone.

The move from $2 trillion to $3 trillion took just over two years, reflecting how rapidly investors have revalued Amazon as cloud computing and generative AI have become more important parts of its business.

AWS previously faced concerns that it was expanding more slowly than Microsoft Azure and Google Cloud during the early stages of the AI boom. Its 37% quarterly growth rate has helped counter the argument that Amazon is losing ground, while validating management’s decision to expand data-center capacity aggressively.

Amazon’s Valuation Remains Below Its Historical Average

Despite the sharp rebound, Amazon continues to trade at a discount to its historical valuation. The stock is valued at approximately 25 times expected earnings over the next 12 months, around 44% below its average forward price-to-earnings multiple over the past decade.

That valuation has recovered from the 17-year low reached in late March but remains well below Amazon’s longer-term average.

Wall Street analysts also remain broadly optimistic. Bloomberg-compiled estimates place the average Amazon price target at approximately $325, implying about 14% potential upside from Monday’s closing price. Of the 82 analysts covering the company, 78 reportedly recommend buying the stock, while four have hold ratings and none recommend selling.

The accelerating growth of AWS has strengthened the case that Amazon’s AI spending can produce meaningful returns. However, future stock performance will remain closely tied to whether the company can build capacity quickly enough to satisfy demand while controlling the financial pressure created by its record investment program.