AWS Fuels Amazon's Brief $3 Trillion Market Capitalization

Amazon's market capitalization briefly topped $3 trillion last week after its quarterly earnings report, which showed a significant increase in revenue and profits. The stock rally was fueled by the company's cloud division, Amazon Web Services (AWS), which reported a 37% year-over-year growth in revenue to $42.23 billion. This is the fastest AWS growth rate in 18 quarters.

The reported net income for the quarter was $62.6 billion, or $5.75 per diluted share, but this figure includes an $53.4 billion pre-tax non-operating gain attributed to Amazon's investment stake in Anthropic. When adjusting for this one-time accounting revaluation, the actual earnings per share was only $1.97, a 8.2% beat over consensus estimates.

The company guided net sales to $197.0 billion to $202.0 billion for the third quarter, which is slightly below analyst expectations of $204.1 billion. However, Amazon explained that this shortfall is due to calendar mechanics rather than demand, as this year's Prime Day discount event was moved into June instead of its typical July slot.

The stock price has been affected by the AWS growth rate, and analysts are now looking at a normalized price-to-earnings ratio of 38.74, which already reflects the company's operating income rather than the reported earnings figure.