Amazon crossed $3 trillion market cap after AWS growth hit 36.7% and capex rose to $220B. Microsoft's $627B backlog and lower P/E offer a rival path. Alpha Score 67 vs 72.
Amazon crossed $3 trillion in market value for the first time on August 3, with shares jumping 5% to a record $285.01. The stock is up more than 23% this year, and it took just over two years to add that latest trillion after Amazon first closed above $2 trillion in June 2024. Founder Jeff Bezos launched the company in 1994 as an online bookseller. Three decades later, cloud computing and AI, not e-commerce, pushed Amazon into this rarefied territory.
The immediate spark was last week's earnings report. Amazon shares posted their biggest one-day jump since April 2012 after the company delivered its strongest cloud growth in more than four years. AWS revenue growth accelerated to 36.7%, and the company raised its annual capital spending forecast. Coming into that report, the biggest worry among investors was that hyperscalers were about to pull back on AI spending. Amazon's numbers did the opposite.
AWS generated 59% of Amazon's operating profit in the first quarter. The cloud unit, not the marketplace, now drives the bottom line. Recent infrastructure and chip supply deals with OpenAI and Anthropic tie Amazon directly to the same AI boom that is driving up its own capital bill. Operating cash flow has been climbing too, evidence that this growth is showing up as real money rather than just on paper.
Amazon is spending $220 billion on data center capital expenditures this year alone. That bet only pays off if AI-driven cloud demand keeps growing into that spending rather than leveling off. AWS itself grew at a 36.7% clip over the same stretch, a strong number that still has to keep climbing to justify capital spending of that scale. The risk is not hypothetical elsewhere in the industry. Alphabet posted negative free cash flow for the first time last quarter, and Meta's free cash flow fell 91%. Both companies are pouring billions into similar AI buildouts without yet seeing much of it come back as cash. Amazon has avoided that fate so far. The same spending pressure sits on its books. There is also a shift underway in how the market treats these stocks: megacap tech names used to move as one basket, and that is starting to break down, with individual earnings now driving individual stock moves. That is healthier for long-term investors, it also means Amazon's next quarter has to stand on its own.
Microsoft now stands as AWS's primary rival in cloud computing. On July 30, Microsoft added nearly $450 billion in market value in a single session, reaching a $3.35 trillion market cap, after forecasting 45% Azure growth for its upcoming fiscal quarter to beat Wall Street estimates. Supporting this trajectory is a massive $627 billion commercial revenue backlog and $175 billion in planned 2026 capital expenditures. Microsoft continues to face long-term friction as Copilot struggles against standalone AI tools. Azure's massive baseline makes sustaining elevated growth rates mathematically harder.
Hedge fund ownership fell for both stocks earlier this year, from 381 to 353 funds in Amazon and from 312 to 282 in Microsoft. Short interest stays thin on each name, 1.09% of Amazon's float against 1.24% for Microsoft, pointing to little organized bearish betting on either. The two diverge sharply on price. As of August 5, Amazon trades at 32.05 times forward earnings versus Microsoft's 23.58, a premium built on AWS staying ahead. Street has already responded to Microsoft specifically, with brokerages lifting its average price target to $560.90.
AlphaScala's proprietary scoring gives Amazon a Moderate 67 out of 100 and Microsoft a Moderate 72 out of 100, reflecting the latter's stronger backlog and lower valuation risk. Amazon's move past $3 trillion rests on a straightforward bet: that AWS keeps converting AI demand into profit fast enough to justify both a premium price and a rising capital budget. The bull case is that the cloud business has already shown it can do exactly that, with profit and cash flow both moving in the right direction.
Amazon's next quarterly report, due in late October, will test whether AWS can sustain its 36.7% growth rate. If it does, the premium over Microsoft may hold. If it slips, the gap could narrow fast.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.