Kurhan - stock.adobe.com

Amazon becomes second publicly traded company to hit $1tn market cap

Retail giant Amazon follows Apple's lead to become second company in history to achieve a $1tn market cap, with analysts predicting that its market value could double by 2020

Amazon.com has become the second publicly traded company in the world to achieve a valuation of $1tn, several weeks after tech giant Apple did the same.

The retail giant achieved the valuation after its share price hit a high of $2050.50 on the morning of 4 September, having doubled in value over the course of the past 12 months. At the time of writing, its share price had dipped backed back down to $2039.51.

In response to the news of Amazon’s $1tn market valuation, the analyst community is now hedging its bets on which of the two firms will be the first to achieve a $2tn market cap.

As alluded to in a recent Computer Weekly report, in anticipation of Apple hitting the $1tn valuation milestone, the general consensus among analysts is that Amazon will out-perform the consumer electronics brand in the years to come and secure a $2tn market cap much earlier.

According to Forrester vice-president James McQuivey, Amazon has a number of competitive advantages over Apple, including the “power of trust” it has built up amongst users of its e-commerce and cloud platforms because of how convenient its offerings are to use.

“Amazon’s service and convenience-based strategy has superseded Apple’s product-first approach, giving Amazon faster access to new markets,” said the accompanying Forrester report.

The company’s innovative use of data also looks set it apart from its peer in the years to come, McQuivey added, before pointing to the creeping ubiquity of Amazon-powered Alexa devices in people’s homes.

In an investors advisory note, published in the wake of Amazon’s $1tn market cap being confirmed on financial blogging site Seeking Alpha, D.M Martins Research predicts the company could be on course to hit a $2tn market valuation by the end of 2020.

This prediction is based on both the continued growth and diversification of the firm’s retail activities in North America, the success of its foray into content creation (through Amazon Prime Video), and the successive quarters of strong financial growth achieved by Amazon Web Services.

“That looks doable in the context of trailing five-year trends,” the post reads. “Amazon may have lost the race to $1tn in market cap to Apple. But, if all goes well, the stock could still rush ahead and beat its peer at becoming the first ever $2tn company.”

News of its trillion dollar valuation comes at a time of heightened scrutiny of Amazon’s tax affairs, after details emerged in August 2018 that the company paid £1.7m in UK tax, despite seeing an uptick in pre-tax profits from £24.3m to £72.3m between 2016 and 2017.

Computer Weekly contacted Amazon for a comment on this story, but had received no response at the time of publication.

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