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Business Management

Amazon's bull run places it among tech sector royalty

For a company that still has many stock watchers scratching their heads and asking questions about its business model, Amazon is certainly wowing Wall Street. The nappies-to-clouds digital conglomerate has been on a bull run over the last 12 months, adding 65 per cent to its market value. Yesterday its shares reached a zenith, valuing the company at $341bn, edging past Facebook, itself a fast-rising stock, to be the US’s sixth most valuable company.

The positive sentiment towards Amazon comes from multiple angles. One is the phenomenal success of Amazon Web Services, the largest cloud platform today. AWS’s rapid growth and profits have helped answer persistent questions about the company’s ability to generate a surplus. The Amazon Prime premium subscription service has also kept customers loyal and willing to come back to the Amazon empire. And of course Amazon is the world’s great shopping marketplace.

But it’s also a reflection of the future: Amazon has made so many bets that analysts hope to see at least one more franchise hit big. In interviews this week CEO Jeff Bezos suggested that one source could be Alexa, Amazon’s play in the digital assistant category that sits in its popular echo speaker/assistant product. That nascent area could become a bonanza for the company that cracks the sector.

The Amazon numbers also point to a conundrum: there is continuing talk of a bubble but tech makes up five of the biggest seven American companies. Apple, Google and Microsoft are the three leaders but Amazon is now closing on all of them. In the late 1990s, at close to the peak of dotcom mania there was a media frenzy over Amazon stock reaching $400 per share. Today, in a strange echo of that time, some watchers asked an amplified version of that question. Can Amazon hit $800?

 

Read next:

AWS helps Amazon answer the pesky profit question

Google, Amazon, Facebook, Apple: Who will be the GAFA?

Apple and spectacular rise of the tech economy

Amazon, Apple, Google and the race to win it all

Jeff Bezos: The Everywhere Man

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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