The Nasdaq's recent gains have been fueled by investor enthusiasm for transformative technologies like artificial intelligence and quantum computing. Analysts project the AI market, currently valued at $300 billion, could expand into the trillions by the end of the decade.
Amazon's stock rose approximately 5% last year, despite reporting growth from its AI initiatives alongside established e-commerce and cloud computing operations. The company is described as a leader in key growth areas.
For cautious investors, Amazon's strength predates the AI boom, with its business not solely dependent on AI spending. Amazon Web Services provides AI chips and platforms but also maintains a broad portfolio of non-AI products and services.
Aggressive investors see Amazon benefiting directly from AI advancements. The company uses AI to optimize fulfillment centers, and AWS has achieved significant growth through offerings like in-house designed chips, Nvidia chips, and the Amazon Bedrock managed service. AWS has reached an annual revenue run rate of $132 billion.
Amazon's stock trades at about 30 times forward earnings estimates, down from over 50 times a few years ago. This valuation may attract investors moving away from highly priced AI stocks amid concerns of a potential bubble.
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