Unless you’ve been out of the news cycle recently, it can’t have escaped your attention that Apple has just become the first ever $1tn company.
This is a mind-boggling achievement, and something economists and business insiders would have thought impossible twenty or even ten years ago. Yet, here we are. But Apple might not sit on the throne alone for too long, as Amazon is also right on the cusp of breaking the $1trillion threshold as well.
We’re going to look at the ins and outs and see how long it might be before Amazon smashes another milestone.
Rocketing Stock Prices
All through 2018, Amazon’s stock prices have been exploding on an upwards trajectory. Stock in the company has risen 61-percent in 2018 up until now, and it’s not just a bubble – the price is set to keep climbing.
Amazon’s stock is at a near record high right now, and this is a very healthy indicator that they will soon move into the very exclusive club of $1tn companies. If stock prices continue on their current path, it could be that Amazon reaches this valuation before the end of 2018. And, of course, there’s always a chance the stock could pick up speed and meet that valuation even earlier. Right now, Amazon’s market valuation sits at $921 billion, so the company doesn’t have much ground to cover to match Apple.
What’s Powering the Growth?
It would be a perfectly reasonable assumption that Amazon’s marketplace dominance when it comes to online shopping and their various popular products is what is pushing them towards the $1tn threshold, but that’s not the whole story.
While Amazon’s place as the pre-eminent supplier of millions of products isn’t doing it any harm, it’s actually the growth of its cloud-computing arm – Amazon Web Services.
With more and more businesses – both huge and small – moving towards the cloud, Amazon has seen its AWS service explode in value. Indeed, this portion of Amazon’s business has the highest growth rate of any part of the organisation. This year alone, AWS should reach over $25 billion in revenues, which represents a 45-percent increase from the same time last year.
Significant successes for the AWS arm include a contract with Samsung to support the technology giant’s internal digital plans, and the service is only going to gain more lucrative, long-term projects going forward.
What About the Future?
Moving into the future, Amazon can rest easy knowing that the various arms of their business will continue to achieve dominance and increase the company’s value.
Their advertising services, for example, are only growing in size, complexity and profitability, and this could be a major contributing factor when they bust through the $1tn barrier.
Alongside this, Amazon isn’t going to stop rolling out its products like Echo, Kindle, Dot and the rest, because these offerings are a huge money earner and put their brand inside millions of homes around the world. It’s this multi-pronged dominance that will surely see Amazon join Apple as a trillion dollar company by the end of 2018.