Amazon shares surged to a new all-time high on Monday, pushing the e-commerce and cloud computing giant past a $3 trillion market capitalization for the first time. The milestone follows a better-than-expected second-quarter earnings report driven by strong artificial intelligence demand across its cloud infrastructure division.
Shares of Amazon climbed roughly 4% in Monday trading, hitting a new record and marking the company’s best single-day performance since May 5, according to CNBC reporting. Investor’s Business Daily noted that the stock advanced 5% to 284.58 in morning trading, putting shares more than 20% higher over two trading sessions and breaking out above a 278.56 cup base entry on MarketSurge.
The valuation milestone places Amazon alongside fellow tech titans Microsoft and Alphabet, which also rallied as investors digested a strong second-quarter earnings season for major cloud providers. Alphabet shares rose 4% to 370.01, while Microsoft added more than 3% to reach 481.98.
AWS Revenue Soars Past Estimates on AI Demand
The catalyst behind the valuation surge lies in Amazon’s financial performance for the second quarter. The company reported adjusted earnings per share of $1.97, beating analyst estimates. Total revenue reached $200.61 billion, outpacing the $196.47 billion Wall Street consensus.
Amazon Web Services delivered $42.2 billion in revenue, flying past StreetAccount expectations of $40.54 billion. That performance mirrors acceleration across the broader cloud sector. Microsoft Azure reported a 43% increase in fiscal fourth-quarter revenue, while Google Cloud posted an 82% jump during its own earnings release.
Bank of America Securities analysts told clients that computing power across major hyperscalers remains mostly supply constrained as enterprises race to train and run large language models from developers like OpenAI and Anthropic.
Andy Jassy Details $220 Billion Capital Expenditure Plan
To meet the relentless demand for generative AI infrastructure, Amazon is aggressively scaling up its spending. Chief Executive Andy Jassy informed investors during the earnings call that capital expenditures are now projected to hit $220 billion this year, an increase from the $200 billion forecast issued in February. Rising memory prices tied directly to the AI buildout are fueling the upward revision.
“But even at that amount, we will still not have enough capacity to meet all the demand we have in 2026, and I believe this dynamic will also be true in 2027 too. In fact, the demand we already have for 2028 is striking.”
Andy Jassy, Chief Executive Officer, Amazon
Other major hyperscalers are following a similar playbook. Amazon, Google, and Meta have all raised their capital expenditure forecasts. BofA projects that combined capital expenditures from hyperscalers will reach $860 billion this year, representing an 80% increase over 2025 spending levels.
This heavy spending cycle has impacted short-term cash metrics. Amazon’s trailing 12-month free cash flow dropped to negative $7.6 billion, a steep decline from an $18.2 billion inflow during the same period a year earlier. BofA analysts led by Vivek Arya noted that declining free-cash-flow remains a concern, though they project negative margins to peak around 5% to 6% in 2027–2028 before returning to healthy profitability.
Payback Timelines and the Road to a $1 Trillion AWS Business
Jassy pushed back against concerns over the spending spree by outlining the payback math behind data center investments. According to the Amazon CEO, it takes fewer than three years for the company to break even on servers, chips, and computing equipment, whereas customer contracts typically span five years or more. Furthermore, while a new data center takes roughly a year to construct, the physical facility can remain operational for 30 years or longer.
“As we get a few years out and the revenue growth outpaces the incremental capex growth, which will happen at some point, the resulting revenue, free cash flow and return on invested capital is very compelling.”
Andy Jassy, Chief Executive Officer, Amazon
With AWS currently operating on a $169 billion annual revenue run rate, Jassy expressed confidence that the cloud division could eventually expand into a $1 trillion annual revenue business supported by strong free cash flow.
Jefferies analyst Brent Thill calculated the combined backlog for cloud hyperscalers—including Oracle—at $2.3 trillion. In a research note, Thill stated that the latest quarterly results reinforce unprecedented AI demand with the hyperscalers as top beneficiaries given their existing platform, distribution, and data advantages.