Amazon’s market cap hits $2 trillion as its CFO keeps an eye on AI—and cutting costs

Good morning. Amazon’s market cap exceeded $2 trillion for the first time on Wednesday, as its CFO is betting big on AI use—both for potential clients and internally.

Amazon shares this year are up nearly 30%—and over the previous 12 months up almost 50%. Earlier in 2024, Alphabet’s market cap hit $2 trillion, but both firms still trail Microsoft, Apple, and Nvidia, all of which are worth more than $3 trillion. (Bank of America just raised its price target for Amazon shares to $220 from $210.)

“We believe Amazon is starting to join the AI party, and the Street is taking notice with $2 trillion now cleared and the road to $3 trillion underway,” Dan Ives, managing partner at Wedbush Securities, told me on Thursday. “Amazon is just getting onto the dance floor.”

However, on Thursday, Amazon CFO Brian Olsavsky didn’t post on LinkedIn about joining the $2 trillion market cap club—instead he commented on the annual meeting of the company’s Finance and Global Business Services (FGBS) unit. FGBS consists of several corporate teams such as accounting, corporate FP&A, and finance operations.

“We heard about fraud prevention, generative AI tools that are improving controllership, forecasting, and more,” Olsavsky writes. “Presenters demonstrated how they work relentlessly to deliver results, invent and simplify, and create better, innovative experiences for our customers.”

Amazon (no. 2 in the Fortune 500) under CEO Andy Jassy has finally hit an inflection point where it can both invest heavily in long-term bets like generative AI while at the same time produce significant profits, Fortune’s Jason Del Rey recently reported. In April, Amazon reported Q1 2024 earnings with revenue of $143.3 billion, up 13% year over year and $10 billion in profit.

Amazon Web Services (AWS) revenue in Q1 was $25 billion, an increase of 17% year over year. AWS is now a $100 billion annualized revenue run rate business, Olsavsky said on the April earnings call.

In the first quarter, “we saw growth in both generative AI and non-generative AI workloads across a diverse group of customers—and across industries—as companies are shifting their focus toward driving innovation and bringing new workloads to the cloud,” he said. Amazon is continuing to see strong demand for AWS, and launched Amazon Q, a generative AI-powered assistant.

Olsavsky, CFO since 2015 and a 22-year Amazon veteran, said during the April earnings call the company remains focused on driving efficiencies across the business to invest in AWS momentum, including generative AI. He added that it’s still “relatively early days in generative AI and more broadly, the cloud space, and we see sizable opportunities for growth.”

Amazon has been cutting costs and restructuring its business to invest in AI in the long term. From November 2022 to March 2023, Amazon conducted multiple rounds of layoffs, cutting a total of 27,000 employees. In May, the company laid off more than 100 customer service managers working in Level 5 and Level 6 middle management positions both at call centers and virtually, Del Rey reported. Amazon divisions such as AWS, Prime Video, and Twitch have all cut hundreds of employees this year.

Have a good weekend.

Sheryl Estrada

sheryl.estrada@fortune.com

Leaderboard

Some notable moves this week:

Karen Parkhill was named CFO at HP Inc. (NYSE: HPQ), effective Aug. 5. Since 2016, Parkhill has served as EVP and CFO at Medtronic, a global provider of medical devices. Parkill succeeds Marie Myers as CFO. Myers stepped down from her role at HP to join Hewlett Packard Enterprise as EVP and CFO in January. Interim CFO Tim Brown will be returning to his role as the head of print finance.

Marcos Gabriel was promoted to EVP and CFO at McCormick & Company, Incorporated (NYSE: MKC), effective Dec.1. On that date, Mike Smith will continue with the company as EVP until his retirement on Feb. 28, 2025. Gabriel, who is currently SVP of global finance and capital markets, joined McCormick in 2017 as CFO of the Americas. He also held the role of chief transformation officer.

Matt Lesmeister was promoted to CFO at flyExclusive, Inc. (NYSE American: FLYX), a private charter jet company, effective June 25. He will succeed interim CFO Billy Barnard. Lesmeister joined the company on May 30 as EVP and chief of staff and has 14 years of public company experience across various finance roles. Most recently, he served as VP of transformation and strategy at Fox Factory Holding Corp.

Kathleen Valiasek, CFO at Local Bounti Corporation (NYSE: LOCL), takes on the additional role of president, effective June 24. Valiasek has been CFO at the indoor agriculture company since April 2021. Previously, she served as CFO and chief business officer at Amyris, a producer of sustainable ingredients for health and beauty markets.

Kevin Nihill was named CFO at Rhinebeck Bancorp and Rhinebeck Bank (Nasdaq: RBKB). Nihill replaced former CFO, Michael McDermott, who retired from the bank after 23 years. Nihill most recently served as EVP and CFO at St. Mary's Bank. He also served as SVP and treasurer at Berkshire Bank.

Lauri Kearnes was named CFO at Byrna Technologies Inc. (Nasdaq: BYRN), effective July 15. Kearnes brings over 20 years of experience, most recently serving as CFO for Harte Hanks, a customer experience (CX) strategy company. Before her role as CFO at Harte Hanks, Kearnes held various positions, including corporate controller, group VP of finance, and VP of finance.

Erik Ostrowski was named SVP, CFO, and chief business officer at Akebia Therapeutics, Inc. (Nasdaq: AKBA), a biopharmaceutical company. Ostrowski joins Akebia from Avrobio, where he served as president, interim CEO and CFO leading the execution of its merger with Tectonic Therapeutic. Before that, he was CFO of Summit Therapeutics where he led its initial public offering on Nasdaq.

Big Deal

As companies look to meet their net-zero and other sustainability goals and fulfill regulatory requirements, there's now a greater sense of urgency, according to new research by Accenture. A survey of more than 700 CFOs across 11 countries and in-depth interviews finds 81% of finance chiefs are feeling pressure. Of those CFOs, 72% said the most pressure is coming from governments and regulators to act on relevant sustainability issues, 71% said board members, and 55% said shareholders/investors.

Upcoming regulations require companies to report on risks and opportunities related to climate change and seek external assurance on their disclosures. However, just 22% of CFOs surveyed say they’re well prepared to do both. Accenture suggests nine talent-based capabilities for companies to accelerate their sustainability strategy.

Going deeper

Here are a few Fortune weekend reads:

“Goldman Sachs was the ‘worst hit’ in the Fed’s latest stress test of big banks. Bank of America still lists it as a buy” by Michael del Castillo

“How much a $1,000 investment in Apple stock 10 years ago would be worth today” by Alicia Adamczyk

“SoftBank’s billionaire CEO says he was put on Earth to create artificial superintelligence that’s 10,000 times smarter than a human—’I am super serious about it’” by Will Daniel

“The best time of day to drink coffee for maximum benefits isn’t first thing when you wake up” by Alexa Mikhail

Overheard

“We have more hard work ahead of us, and we are focused on building a solid foundation for the future, driving the stabilization of our business, and returning to longer-term enterprise growth.”

—Walgreens Boots Alliance global CFO Manmohan Mahajan said on Thursday during the company's earnings call for the period ending March 31. Walgreens announced it will be closing a “significant” amount of underperforming U.S. stores. Walgreens is facing a difficult operating environment, “including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins,” CEO Tim Wentworth said in a statement. The company lowered its full-year adjusted EPS guidance to a range of $2.80 to $2.95.

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