Amazon (AMZN) shares have surged approximately 27% recently, reaching all-time highs following a strong first-quarter earnings report. Key growth drivers, particularly Amazon Web Services (AWS) and its custom silicon operations, are showing significant momentum. AWS revenue jumped 28% year-over-year to $37.6 billion, marking its fastest growth in 15 quarters, while the chip business has crossed a $20 billion annualized run rate, positioning it among the largest data center semiconductor operations globally.

This robust performance underscores the potential for continued growth, especially as AWS’s backlog reached $364 billion, bolstered by a recent $100 billion agreement with Anthropic. Despite risks related to high capital expenditures and shrinking free cash flow, Amazon’s diversified revenue streams—including a thriving advertising business—suggest a solid foundation for future profitability.

For market professionals, Amazon’s current valuation, with a price-to-earnings ratio around 32, appears reasonable given its growth trajectory, making it an attractive investment opportunity even after the recent rally.

Source: fool.com