Once upon a time, it was industrial and energy companies that ruled that roost, but times have changed. In 2004, General Electric and ExxonMobil were the world's most valuable publicly traded companies in terms of market cap, worth $319 billion and $283 billion, respectively. Now, just 20 years later, data is the new oil and technology leaders top the charts.
With a market cap of just $2.1 trillion, it might seem to be jumping the gun to suggest that Amazon (NASDAQ: AMZN) has all the makings of a future member of the $3 trillion club. However, the stock has gained 39% over the past 12 months and 132% over the past five years, so it seems its admission is merely a matter of time.
The economy, it appears, in finally on the mend, which will likely fuel Amazon's growth. Add to that the company's multiple leadership positions and a strong showing in AI, and you have all the requirements for membership in this elite fraternity.
It's the economy
The biggest headwind holding Amazon back over the past few years has been the struggling economy. It appears the downturn and its decades-high inflation may finally be in the rearview mirror. Consumer confidence recorded its strongest monthly gains since March of 2021, while those anticipating a recession over the coming year dropped to the lowest level in more than two years. Additionally, the Federal Reserve Bank has recently made its second interest rate cut after a long hiatus. Add to that an historically low unemployment rate, and you have all of the ingredients for a rebounding economy.
These improvements have fueled both e-commerce and cloud spending, which has been evident in Amazon's results. In the third quarter, net sales of $159 billion accelerated to 11% year over year, while diluted earnings per share (EPS) of $1.43 jumped 52%.
Each of the company's major operating segments contributed to the results. North American sales climbed 9% year over year, while international sales jumped 12%. Amazon Web Services (AWS) -- the company's cloud computing business -- continued its recovery, increasing 19%, tied for its highest rate of growth in nearly two years. Finally, the company's advertising -- which reaches into every corner of Amazon's growing empire -- increased 19%.