Amazon Hits Record High to Become Fifth Company With $3 Trillion Market Cap as Morgan Stanley and JPMorgan Raise Targets
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On August 3, Eastern Time, Amazon reached a $3 trillion market cap, driven by AWS’s 39% operating margin. Strong AI-driven demand for computing resources faces capacity constraints rather than limited market interest. Management highlights a sub-three-year equipment payback period against five-year contracts, creating significant long-term cash flow. AWS's $496 billion backlog reflects 60% year-on-year growth. Consequently, major financial institutions including BofA, UBS, and Goldman Sachs have raised their price targets, citing improved margins and robust capital efficiency. Analysts remain bullish, emphasizing that AWS acts as a primary catalyst for sustained valuation expansion through 2027.
TradingKey - On August 3, Eastern Time, Amazon ( AMZN) stock price hit a record high, reaching as high as $287.16, making it the fifth company in history to surpass a $3 trillion market capitalization.
Recently, Amazon's earnings report showed that AWS's second-quarter operating margin was as high as 39%. Customers, including AI laboratories and large enterprises, are scrambling to lease chips and computing equipment from them—so much so that the bottleneck limiting business expansion is no longer market demand, but rather the limits of production capacity.
Amazon daily chart, Source: TradingView
Amazon CEO Andy Jassy stated that the company takes less than three years on average to recoup its costs for purchasing computing equipment, while most of the computing contracts signed with AI customers are for more than five years. This means that the second half of these long-term lease contracts consists entirely of pure profit "cash cows." "The resulting revenue, free cash flow, and return on invested capital are very attractive," Jassy said.
BofA Securities noted that Amazon management's framework for data center returns is encouraging, with a building life of 30 years and a payback period of less than 3 years for servers and network equipment, after which the assets can continue to generate strong returns. AWS's backlog increased by $132 billion quarter-on-quarter to $496 billion, with growth accelerating by 60 percentage points year-on-year. The firm raised its price target for Amazon from $310 to $320, reiterating a "Buy" rating.
UBS expects Amazon's operating margin to continue expanding through 2027, and the market will continue to narrow the gap in its revenue and operating profit forecasts, ultimately driving a re-rating of the stock price. The bank reiterated its "Buy" rating and raised its price target from $305 to $318.
In addition, Barclays raised Amazon's price target from $330 to $365, maintaining an "Overweight" rating; Goldman Sachs raised its price target from $335 to $375, maintaining a "Buy" rating; Morgan Stanley raised its price target to $335, maintaining an "Overweight" rating; JPMorgan Chase raised its price target from $330 to $365, reiterating an "Overweight" rating on Amazon.
This content was translated using AI and reviewed for clarity. It is for informational purposes only.
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