Cloud Revenue Surges 37%... Boosting Amazon's $5 Trillion Valuation Forecast

▲ Amazon/Source: X ©

A forecast has emerged that Amazon (AMZN) could reach a market capitalization of $5 trillion as early as mid-2028 if it continues its growth in artificial intelligence and cloud services.

According to crypto media outlet Finbold on August 1 (local time), ChatGPT predicted that Amazon's market capitalization would reach $5 trillion between June and September 2028, based on the company's recent performance and growth trends. Following the second-quarter earnings, which surpassed market expectations announced on July 30, Amazon's market capitalization expanded to approximately $2.92 trillion. With the stock price at around $271, an additional increase of approximately 71% is needed to reach $5 trillion.

The baseline forecast is based on the assumption that Amazon Web Services (AWS) maintains a growth rate of 25-35%, advertising revenue continues to see double-digit growth, and demand for artificial intelligence remains strong. If AWS grows by 35-40% by 2027, the target could be achieved by late 2027 or early 2028. Conversely, a slowdown in cloud growth, weakening returns on AI investments, and an economic downturn could push the timeline to after 2029.

The probability by period was estimated at 25% before the end of 2027, 45% in 2028, and 20% between 2029-2030. The probability of not reaching a $5 trillion market capitalization before 2031 was presented as 10%. The most likely scenario is 2028, with Amazon's stock price surging over 15% in July, fueled by a rally after the earnings announcement.

Second-quarter revenue increased by 20% year-over-year to $200.6 billion, earnings per share were $5.75, and operating income was $27.5 billion. AWS revenue grew by 37% to $42.2 billion, showing its fastest growth in over four years, with operating income reaching $16.6 billion. Advertising revenue increased by 26% to approximately $19 billion, and the artificial intelligence and custom semiconductor businesses each surpassed an annualized revenue of $25 billion.

The key going forward is whether AWS can maintain a growth rate of over 30%. AWS's annualized revenue is approximately $169 billion, and its backlog is approximately $496 billion. The market will likely focus on the third-quarter earnings scheduled for late October, advertising growth, and year-end consumer demand. Whether Amazon's planned capital expenditure of $200 billion in 2026 and an additional $20 billion investment for AI infrastructure, data centers, and custom semiconductors will translate into actual profits is also a critical variable determining when the $5 trillion market capitalization will be achieved.

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