$3 Trillion Club Member Amazon Poised to Hit $5 Trillion by 2029
Amazon recently joined the exclusive $3 trillion club after its stock surged on better-than-expected earnings results. The company's cloud computing platform, Amazon Web Services (AWS), was a standout performer, driving growth and expansion.
AWS revenue grew 37% year-over-year, marking the fifth consecutive quarter of accelerating growth for the segment. This impressive performance can be attributed to Amazon's strength in artificial intelligence services and its own chips business. Management noted that both segments have reached a $25 billion annualized run rate last quarter and are growing at triple-digit rates.
Amazon has secured significant deals with OpenAI and Anthropic, agreeing to provide 2 GW worth of Trainium chips to OpenAI and up to 5 GW of Trainium and Graviton cores over its 10-year agreement with Amazon. These agreements will continue to drive growth for AWS as they ramp up.
While there are risks facing Amazon, such as a collapse in demand for AI compute or the hyperscalers building out more capacity than needed, CEO Andy Jassy noted that the lead time for server expenses is a matter of months and have a useful life of about five years with a payback period of just under three years.