I just saw an interesting data comparison, and Amazon is about to join the trillion-dollar club. Currently, only three companies have surpassed a $3 trillion market cap—Nvidia, Apple, and Alphabet—while Amazon, with a market cap of $2.2 trillion, seems not far from reaching that goal.

Honestly, many people have been somewhat pessimistic about Amazon lately, as if they've forgotten how this company got to where it is today. I think this actually presents an opportunity because Amazon's business structure is quite unique.

First is its e-commerce business. Although not the first to do it, Amazon has turned this into a textbook-level success. In Q4 last year, e-commerce revenue was $21.34 billion, up 14% year-over-year, with 57% coming from third-party seller services. This segment has also helped Amazon surpass Walmart to become the world's largest retailer.

But the real core is actually AWS cloud services. This is Amazon's cash cow—accounting for 18% of total revenue but contributing 57% of operating profit. AWS remains the leader in this market, controlling 28% of the share, far ahead of Microsoft’s 21% and Google’s 14%. More importantly, cloud services are growing especially fast driven by AI demand, with Q4 growth reaching 30%.

The third business is advertising. This is the fastest-growing segment, with Q4 revenue of $2.13 billion, up 23% year-over-year, making it the third-largest digital advertiser globally, behind only Google and Meta. Prime Video, live sports streaming, and other new initiatives are also new growth points.

What’s most interesting is that Amazon is heavily investing in AI, with over 1,000 AI applications either in development or in use. CEO Jassy said AI will be a major catalyst. To meet the demand for cloud and AI services, Amazon plans to invest $20 billion in capital expenditures this year, a significant increase from last year's $13.1 billion. This number startled some investors, causing the stock to drop 10% at one point, but Jassy’s words were “we are monetizing capacity as quickly as possible”—implying that demand already exists, and these expenditures are about seizing opportunities rather than blindly burning cash.

From a numerical perspective, Amazon only needs to grow 36% to reach a $3 trillion market cap. Based on Wall Street’s expected revenue of $80.7 billion in 2026, Amazon’s price-to-sales ratio would be less than 3x. Maintaining this ratio, revenue would need to reach $1 trillion to support a $3 trillion valuation. With an average annual growth rate of 11%, it could theoretically reach that by 2029. But considering Amazon’s historical growth trajectory, this timeline might be even sooner.

Currently, Amazon’s P/E ratio is less than 29x, cheaper than the S&P 500’s 30x. Over the past decade, Amazon has surged 633%, far outperforming the S&P 500’s 251%. That’s why now might be a good entry point.