Amazon.com on Tuesday became the second publicly traded U.S. company to be valued at more than $1 trillion, as the tech giant expands into new lines of business that are helping turn record profits.
Amazon shares rose as much as 1.9 percent Tuesday morning to $2,050.50 — 23 cents above the amount needed to bump the company over the $1 trillion line. Amazon's stock has increased 70 percent so far this year as U.S. tech stocks continue to reach record highs. Although the stock closed the day up 1.3 percent, Amazon was below the $1 trillion mark.
Amazon's market valuation in recent weeks pulled ahead of two other tech giants — Google's parent company, Alphabet, and Microsoft — to hit $1 trillion. Microsoft currently has a market cap of $854.5 billion, while Alphabet is close behind at $840.3 billion. Apple's valuation has risen to $1.1 trillion since it first passed the threshold. But Amazon's stock growth has outpaced the competition: Alphabet's stock has risen 15 percent this year, while shares of Apple and Microsoft are up about 30 percent.
Amazon, founded by chief executive Jeffrey P. Bezos as an online bookseller in 1994, has grown rapidly into one of the country's largest and most influential companies. In addition to its flagship e-commerce business, the Seattle-based giant also has a hand in a number of other industries, including cloud computing, home security and movie production. It is the country's second-largest private employer, behind Walmart, and so far this year has posted $4.1 billion in profit. (Bezos also owns The Washington Post.)
Bezos is the biggest beneficiary of Amazon's rising stock price: He is the world's wealthiest person and, as of Tuesday afternoon, was worth $166 billion, according to the Bloomberg Billionaires Index.
Analysts said the success of the company's cloud business, Amazon Web Services, and fast-growing advertising arm have helped reassure investors who have long worried about Amazon's profitability. The company famously did not turn a profit until 2001, and even then, results were spotty from quarter to quarter as Amazon reinvested in its business.
But that has begun to change: Amazon has now reported a profit for 13 quarters, with earnings growing 12-fold to $2.5 billion in the most recent quarter. Those results have impressed investors and helped lift its shares to record highs.
"For decades, investors have questioned Amazon's ability to grow its profit margins,” said Victor Anthony, managing director of Aegis Capital. “Now that it has several high-margin revenue streams, we're seeing those doubts subside."
Amazon Web Services, which continues to account for much of the company's growth, brought in $6.1 billion in revenue during the most recent quarter. Amazon's advertising business, meanwhile, helped bring in $2.2 billion for the company, more than double what it did a year ago.
The company is also expanding into new lines of retail, including groceries, pharmaceuticals and home technology, making it a one-stop shop for millions of American households. Amazon now accounts for nearly half of the country's online spending, according to eMarketer. (In second place: the auction site eBay, which commands about 6 percent of online sales.) The company's Prime membership program, meanwhile, has more than 100 million paying users.
“The common connection between Apple and Amazon is their ability to get us to think about them every day — whether through commerce or services,” said Brendan Witcher, an analyst for market research firm Forrester. “They are both almost seen as necessary as a utility in some consumer’s lives."
But Amazon's size and reach have also led to increased scrutiny by lawmakers who say they worry the company is becoming a monopoly. President Trump has repeatedly lashed out against Amazon on Twitter, and this summer tweeted that “many feel” there may be antitrust concerns related to its growth.
Working conditions at the company's warehouses have also drawn mounting criticism. Sen. Bernie Sanders (I-Vt.) plans to introduce legislation Wednesday that would require Amazon and other large employers to reimburse the government for any federal benefits collected by their workers. As of June 30, Amazon had 575,700 workers, up 51 percent from a year earlier.