Amazon hits $2 trillion in valuation on AI fervor, rate cut bets

FILE PHOTO: Figurines with computers and smartphones are seen in front of Amazon logo in this illustration taken, February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) -Amazon.com Inc hit $2 trillion in market value for the first time on Wednesday, becoming the fifth U.S. company to surpass that level as optimism around artificial intelligence and potential interest rate cuts this year drove demand for technology-related stocks.

The stock rose 3.4% to $192.70, giving the e-commerce giant a market value of over $2 trillion and putting it in the same club as technology heavyweights Microsoft Corp, Apple Inc, Nvidia Corp and Alphabet.

U.S. stock indexes have recorded robust gains this year on relentless enthusiasm around AI, optimism around resilience in the U.S. economy and potential easing of interest rates from the Federal Reserve. [.N]

Wall Street was trading near record levels, largely powered by megacap stocks such as Nvidia and Amazon, whose future cash flows stand to benefit from lower interest rates.

Shares of Amazon, which were added to the blue-chip Dow Jones Industrial Average index in February, have climbed over 26% this year. The company became the fifth biggest U.S. company by market value in February after Nvidia went up a spot.

Amazon Web Services is the largest cloud services provider in the world, and growth at the Amazon unit has returned after a dip in the past year, thanks to surging adoption of AI technologies.

The company has also invested in AI startup Anthropic and robotics firm Figure as it looks to capitalize on the AI boom.

Late last year, Amazon unveiled a new generation of custom-designed chips used in data centers, targeting applications for machine-learning training and generative artificial intelligence.

(Reporting by Shristi Achar A in Bengaluru, Additonal reporting by Akash Sriram; Editing by Shinjini Ganguli)