When looking at the headlines, the frontrunners in the race to reach a $5 trillion valuation seem clear: Nvidia, Apple, and Microsoft all appear poised to hit that landmark in the near future.
However, there is another significant growth narrative developing in the tech sector that could easily be missed. Thanks to its dominant position in cloud computing, a highly profitable advertising division, and a more efficient, automated logistics system that continues to drive down expenses, Amazon ( AMZN 0.78%) might soon catch investors off guard. Here’s why Amazon’s market value could surpass $5 trillion by 2030.
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Outstanding financial results
Amazon has delivered strong financial performance recently. In the second quarter, revenue climbed 12% year over year to $167.7 billion, while operating income jumped 31% to $19.2 billion. Amazon Web Services (AWS), its cloud arm, reported a 17.5% increase in revenue to $30.9 billion, and advertising revenue rose 22% to $15.7 billion. Over the past four quarters, Amazon has produced a healthy $18.2 billion in free cash flow.
The company projects third-quarter revenue to be between $174 billion and $179.5 billion, factoring in a slight benefit from currency exchange rates.
AWS’s dominance
Holding a 30% share of the global cloud infrastructure market, Amazon leads the sector, and AWS stands to gain as more IT operations move from on-premises setups to the cloud. Currently, about 85% to 90% of IT budgets are still spent on on-site systems, but this is expected to change as AI adoption accelerates. AWS is also well placed to benefit as enterprise AI spending shifts from model training to inference—the real-time use of AI models. As pilot projects become commercial, inference could make up as much as 80% to 90% of total AI expenses.
Generative AI inference is also expected to become as commonplace as computing, storage, or database services. It’s likely that businesses will want to run these workloads in the same cloud regions as their other applications and data. Since AWS hosts more applications and stores more enterprise data than any other provider, it could become the go-to platform for inference workloads.
AWS is also working to reduce its AI-related expenses. According to management, its custom Trainium2 chip offers roughly 30% to 40% better price performance for inference tasks compared to other GPU providers. Anthropic is using Trainium2 to train its next Claude models, and Amazon Bedrock relies on it for inference. The company is also developing the third generation of the Trainium chip, which is expected to further enhance computing and inference performance. This ongoing advantage in price and performance could set AWS apart for years to come.
At the end of the second quarter, AWS had reached an annualized revenue run rate of $123 billion. Its cloud business also boasted a $195 billion backlog, up 25% from the previous year, providing strong visibility into future revenue. Management also anticipates that demand will continue to outstrip available capacity, with conditions expected to improve in the coming quarters.
Advertising segment
Amazon’s advertising products, which span its e-commerce platform, Prime Video, Twitch, Fire TV, and live sports, enable advertisers to connect with over 300 million U.S. consumers.
In June, Amazon teamed up with Roku to allow advertisers using Amazon’s demand-side platform to reach more than 80 million connected TV households in the U.S. The company also integrated its demand-side platform with Disney’s real-time ad exchange, giving advertisers direct programmatic access to premium ad space on Disney+, ESPN, and Hulu. With access to customer identities, Amazon’s shopping data, and high-quality streaming inventory, advertisers can more precisely target their desired audiences. This is expected to further strengthen Amazon’s advertising business in the near future.
Enhancing retail profitability
Amazon is also working to boost its retail margins. The company has restructured its U.S. logistics network to a regional model, positioning inventory closer to shoppers, increasing direct shipping routes, and improving product consolidation. These changes have reduced transit distances and manual handling, resulting in faster deliveries and lower costs. Alongside extensive automation and robotics, including its DeepFleet AI system, Amazon’s retail division is on track for improved profitability.
What could drive Amazon to a $5 trillion valuation?
Currently, Amazon is valued at just 3.7 times sales, which is relatively inexpensive. Achieving a $5 trillion market cap wouldn’t require the company to reach unsustainable valuation multiples.
If AWS continues to grow revenue at a low- to mid-teens rate as capacity expands and inference workloads increase, advertising grows at a high-teens to 20% pace thanks to strong connected TV partnerships, and retail margins rise due to regional logistics and automation, Amazon will have a powerful revenue mix and stronger margins. While AWS and advertising will drive profitability, the retail business will help lower the cost to serve customers—leading to higher profit margins, strong cash flow, and greater predictability. This scenario is much more favorable than when Amazon’s valuation previously peaked at about 4.6 times sales earlier in the decade, when its advertising segment was smaller, AI opportunities were limited, and logistics were less efficient.
Looking ahead, it’s reasonable to expect Amazon’s price-to-sales (P/S) ratio to reach between 5 and 7 by 2030, reflecting higher multiples for its cloud and advertising businesses and lower ones for its slower-growing retail segment. If Amazon maintains its leadership in AI inference, the P/S multiple could climb even higher.
Analysts project Amazon’s revenue will approach $1.15 trillion by 2030. If the P/S multiple rises to 5, Amazon’s market cap could reach nearly $5.75 trillion by 2030—well above the $5 trillion threshold.
