Amazon.com Inc. is poised to achieve a significant milestone in the stock market, with its market capitalization on track to reach a record high, a feat not accomplished in nearly three years. The company’s stock, trading up 1.0% in Wednesday’s session to a recent price of $182.44, is expected to push its market capitalization to $1.89 trillion by the end of the trading day if these gains persist. This surpasses its previous market value peak of $1.88 trillion reached on July 8, 2021, marking a significant milestone for the e-commerce giant.
For Amazon to set a new market capitalization record, its stock price must close above $181.166. Moreover, to achieve a market capitalization of $1.9 trillion, the stock price needs to exceed $182.914, and to reach the coveted $2 trillion mark, it must surpass $192.541. However, despite the potential for a new market capitalization record, Amazon’s shares themselves are not yet on track to reach a new high. They would need to surpass $186.57 to achieve this milestone.
The discrepancy between Amazon’s market capitalization record and its stock price performance can be attributed to the increase in the company’s split-adjusted share count by 316.1 million, or 3.1%, since it last reached a market-value record. This increase in share count dilutes the per-share value and impacts the stock’s ability to reach new highs.
Amazon’s stock has demonstrated strong performance since the beginning of the year, following its impressive growth trajectory in 2023. Year-to-date, shares are up nearly 20%, outpacing the broader market’s ascent. In 2023, the stock surged by over 80%, driven by a combination of factors including strong performance in its Amazon Web Services (AWS) cloud-computing business and improvements in margins within its retail segment.
The success of Amazon’s AWS business is particularly noteworthy, as it has been energized by increased demand for artificial intelligence services. This segment has become a key driver of revenue growth and profitability for the company. Additionally, improvements in margins within its retail business, fueled by optimizations in its fulfillment networks and operational efficiencies, have contributed to its positive performance.
Wells Fargo analysts recently expressed high confidence in Amazon shares, naming them a “high-conviction” pick for the second quarter. They highlighted further potential for margin expansion in the retail segment, driven partly by changes in the fee structure for sellers utilizing Amazon’s fulfillment services. This optimism underscores the favorable outlook for Amazon’s continued growth and market dominance.
In summary, Amazon’s impending market capitalization record reflects its continued strength and resilience in the market, driven by robust performance across its various business segments. Despite challenges such as share dilution and fluctuating stock prices, the company remains well-positioned for sustained growth and value creation in the foreseeable future.