Uncover the High-Octane Artificial Intelligence (AI) Investment Option Likely to Match Apple, Nvidia, and Microsoft in the $3 Trillion Elite by 2027

Unveil the Powerful Artificial Intelligence (AI) Investment Option, Potentially Earning Its Spot Among Apple, Nvidia, and Microsoft in the $3 Trillion Elite by 2027

The recent advancements in artificial intelligence (AI) have significantly reshaped the technology sector, creating a new group of billionaires in the process. According to several experts, AI's capacity to generate content, streamline processes, and boost productivity will pave the way for the fourth industrial revolution.

Currently, the three most valuable companies globally are Apple, Nvidia, and Microsoft, each boasting market caps exceeding $3 trillion. This trio shares a common trait - they are all pioneers in AI technology. It's plausible that future entrants into the $3 trillion club will follow suit by leveraging AI.

Leading the charge in AI research and implementation is Amazon (AMZN -0.66%). With its strategic moves in AI, it's well-equipped to take advantage of this technology, potentially securing a place in the $3 trillion club by 2027. Let's dissect how AI will drive Amazon's growth.

Amplifying Amazon's Business with AI

Amazon's history of employing advanced algorithms for process improvement and business efficiency is well-known. Now, it's utilizing advancements in generative AI to enhance these achievements even further.

For instance, Amazon's advancements in AI-powered robotics significantly simplify tasks like stowing, picking, packing, and shipping, markedly reducing fulfillment processing time by up to 25%. Given that fulfillment expenses accounted for over 10% of Amazon's total operating expenses last year, these incremental efficiencies could have a substantial impact on the bottom line. Moreover, Amazon continues to ramp up automation in its fulfillment network, which can ultimately bolster profits.

One of the reasons for Amazon's continued success is its ability to present the right products to the right consumers at the right time. Although the company has long used algorithms to boost the relevancy of its product recommendations, its latest AI innovations take it a step further. Plus, the launch of its AI-driven shopping assistant, Rufus, in major markets, helps shoppers find desired items and escalates sales.

Amazon is consistently developing a suite of generative AI-powered tools to curate display, video, and audio advertising for its third-party merchants. For example, its video generator uses a single product image to generate AI-driven customer videos. With over 60% of Amazon's sales coming from third-party vendors, its dedication to helping these sellers thrive indirectly benefits Amazon.

Hosting AI functionality in the cloud could be the most evident way Amazon will profit from AI advancements. Access to the necessary data for training large language models required for AI is a puzzle for many firms. Amazon, however, with its access to massive amounts of information, is uniquely positioned to create top-notch AI models.

Amazon Web Services (AWS) is the world's leading cloud infrastructure service. Jassy has stated that over the past 18 months, AWS has released virtually twice as many machine learning and AI features as its main competitors combined. AWS also offers a substantial repository of widely used AI models on its Amazon Bedrock platform to cater to its customers.

Lastly, for budget-conscious cloud users, Amazon has developed AI-specific chips, Trainium and Inferentia, to ensure that those who cannot afford expensive AI solutions can reap similar benefits.

The breadth of its offerings will likely persuade many potential customers to jump on the AI bandwagon, contributing to Amazon's growth. AWS generates 17% of Amazon's revenue and 62% of its operating profit, making it a crucial revenue source. By offering the broadest selection of AI solutions, Amazon is fostering growth in its cash cow.

While there are more examples, these illustrate various ways that Amazon is leveraging AI to boost its performance and elevate its business. These initiatives will play a significant role in Amazon's entry into the $3 trillion club.

The Journey to $3 trillion

Amazon's current market cap is approximately $2.39 trillion (as of now). To reach $3 trillion, the company would need stock price increases of around 25%. Wall Street anticipates Amazon's revenue to reach $638 billion in 2024, giving it a forward price-to-sales (P/S) ratio of around 3.4. If its P/S ratio remains steady, Amazon would need to expand its revenue to around $799 billion annually to maintain a $3 trillion market cap.

Wall Street is predicting a 11% annual revenue growth for Amazon over the next five years. If Amazon can deliver on this projected growth rate, it may attain a $3 trillion market cap as early as 2027. It's significant to note that Amazon has grown its annual revenue by around 442% over the past decade, implying that Wall Street's expectations could be conservative.

At around 3.4 times forward sales, Amazon appears to be an attractive investment opportunity compared to Apple and Nvidia, whose current forward multiples are 8 and 17, respectively. This price tag seems fair given Amazon's numerous ways to prosper from the expanding AI adoption.

In the context of leveraging AI for financial gains, investing in companies like Amazon, which is aggressively implementing AI in its operations and services, could be a strategic move for financiers seeking to capitalize on the forthcoming AI-driven economic revolution. With Amazon's potential to amplify its revenue to $799 billion annually to achieve a $3 trillion market cap by 2027, there's a substantial opportunity for those interested in AI-focused investing.

Furthermore, as Amazon Web Services (AWS) generates a substantial portion of Amazon's revenue and operating profit, investing in AWS offers a direct way to participate in the growth of AI technologies, as AWS continues to release twice as many machine learning and AI features as its main competitors and provides a wide range of AI models to its customers.