Amazon.com Inc. shares edged higher on Thursday, propelled by a major cloud computing deal that underscores the accelerating demand for artificial intelligence infrastructure. The e-commerce and cloud giant's market capitalization approached the $3 trillion mark, closing in on a historic valuation milestone.
Shares of Amazon (AMZN) traded up 0.8% to $274.00, after fluctuating between $267.45 and $274.36 during the session. The move brought the company's market value to approximately $2.98 trillion, just shy of the $3 trillion threshold. The broader market also rallied, with the Nasdaq Composite and S&P 500 both closing at record highs, buoyed by easing geopolitical tensions and renewed tech optimism.
The catalyst for Amazon's advance was a significant commitment from Snowflake (SNOW), which announced a $6 billion, five-year agreement to use Amazon Web Services (AWS) infrastructure. The deal includes spending on AWS's Graviton compute and AI capacity, highlighting the growing importance of specialized chips for AI workloads. Graviton, Amazon's custom-designed processor, is engineered to deliver better price performance for certain cloud tasks compared to standard chips.
AWS CEO Matt Garman emphasized that Snowflake's expanded investment in Graviton would provide "performance, flexibility, and cost savings" for both data warehousing and AI applications. Snowflake CEO Sridhar Ramaswamy added that the partnership aims to enable customers to run AI directly on governed data, eliminating the need to move data to separate environments—a key efficiency for enterprise AI adoption.
While the Snowflake deal alone is not transformative for Amazon's revenue, it serves as a strong signal of AI-driven cloud demand. AWS reported first-quarter sales of $37.6 billion, a 28% year-over-year increase, with operating income rising to $14.2 billion from $11.5 billion. CEO Andy Jassy noted that AWS experienced its fastest growth in 15 quarters and highlighted that Amazon's chip business has reached a $20 billion annual run rate.
Snowflake shares also surged on the news, supported by the company's improved outlook. Gil Luria, managing director at D.A. Davidson, characterized the Amazon partnership as "another element" in Snowflake's growth narrative. The deal is expected to deepen product integration between the two companies, particularly in generative and agentic AI—software capable of pursuing goals autonomously, not just responding to prompts.
Competition in the cloud AI space remains intense. Microsoft (MSFT) reported Azure and other cloud services revenue up 40% last quarter, while Alphabet's (GOOGL) Google Cloud revenue jumped 63% to $20.0 billion. AWS must leverage its scale, custom chips, and extensive customer base to maintain market share as AI buyers increasingly seek capacity wherever it's available.
Risks persist for Amazon. The company's free cash flow dropped to $1.2 billion over the trailing twelve months, driven by elevated spending on property and equipment, much of it tied to AI. If corporate AI demand cools or pricing pressure from Microsoft and Google intensifies, investors may question whether Amazon's heavy investments in data centers and chips will yield the profits implied by its current stock price.
For now, the market is rewarding Amazon for its robust retail and advertising businesses—which continue to generate cash—and for AWS's ability to land AI deals. The Snowflake agreement was taken as further evidence of AWS's momentum, though investors remain cautious, awaiting more definitive proof of sustained AI-driven profitability.
