AWS Drives Amazon to Record High with Trillion-Dollar Potential

Amazon's stock price has reached a new record high after a strong second quarter for the company. The e-commerce giant's cloud computing platform, Amazon Web Services (AWS), is driving this growth with accelerating revenue increases.

AWS generated $42.2 billion in revenue during the second quarter, a 37% increase from the same period last year. This growth rate has accelerated for four consecutive periods, highlighting the platform's momentum. Moreover, AWS ended the quarter with a staggering $496 billion order backlog from customers waiting for more data center capacity to come online.

CEO Andy Jassy predicts that AWS could eventually generate a trillion dollars in annual revenue, implying substantial potential growth. However, investors should be cautious as Amazon plans to spend an enormous amount of money on building more data centers in the coming years, which may affect earnings in 2027 and beyond.

The company's stock price is currently at a P/E ratio of about 22, making it relatively inexpensive compared to its big-tech peers. However, analysts expect Amazon's earnings to decline in 2027 due to lower investment gains from Anthropic.