Amazon Pulls The Mag 7 Higher

By Douglas A. McIntyre Published Apr 28, 12:30PM EDT

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Amazon Does Well Outside AI
AWS Remains A Huge AI Advantage
AI Alliances Become More Complex

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Amazon Pulls The Mag 7 Higher — © Public Domain / Wikimedia Commons

Amazon (NASDAQ: AMZN | AMZN Price Prediction) is up over 13% this year, which is the best advance of any of the Mag 7. It would seem the company is not at the forefront of AI, so what put it in that position? The answer is that it has more highly successful businesses to fall back on. And, it has the AWS platform, the largest cloud computing operation in the world, to distribute AI enterprise software.

Amazon does plan to spend a fortune on AI this year. Much of it is in data centers. Amazon says its figure is $200 billion. It is a phenomenal amount to build the infrastructure most needed to get an edge.

Amazon will also likely invest $33 billion in Anthropic, which many experts say leads the sector in enterprise AI sales. Amazon has made the point, “Now, over 100,000 customers run Anthropic Claude models on AWS, making Claude one of the most popular model families on Amazon Bedrock.” And Amazon has moved into the chip business, making it less dependent on Nvidia (NASDAQ: NVDA), the clear leader in the AI chip market. According to TechCrunch, “Meta has signed a deal to use millions of AWS Graviton chips to power its growing AI needs.” So these hardware products already have a large number of outside customers.”

It is often forgotten that AWS has an edge in AI distribution. It has 28% of the cloud infrastructure market. Microsoft (NASDAQ: MSFT) Azure has 21%, and Google has 14%. Cloud computing is perhaps the best conduit to adding enterprise AI customers. A large share of the cloud computing market is a major leverage point for AI distribution. It is the main delivery mechanism for AI tools and infrastructure. A recent deal with OpenAI has further enhanced this advantage. (OpenAI and Amazon announced a multi-year strategic partnership to accelerate AI innovation for enterprises, startups, and end consumers around the world. Amazon will also invest $50 billion in OpenAI, starting with an initial $15 billion investment and followed by another $35 billion in the coming months when certain conditions are met.) Another deal between Microsoft and OpenAI could further bolster the Amazon deal.

Amazon also remains America’s online retail superpower. Its e-commerce revenue was $587 billion last year, of which it made $31 billion.

Given its advantage over the other Mag 7 companies, its stock could outperform the group’s average for the entire year.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.