The Motley Foolยท2025-09-24 00:15Core Viewpoint - Amazon is positioned to significantly benefit from the growth in data center spending and artificial intelligence (AI), potentially surpassing a $3 trillion market cap by 2026 due to its strategic partnerships and revenue growth in various segments [2][12]. Group 1: Amazon's Strategic Partnerships - Amazon has a cloud and computer chip deal with AI start-up Anthropic, which is expected to drive growth in its AWS segment [2][6]. - Anthropic's annual recurring revenue (ARR) has surged from $1 billion to $5 billion, with AWS as its key cloud partner [6][7]. - AWS is focused on generating positive returns, which may explain its slower deal wins compared to competitors like Oracle [5]. Group 2: AWS Performance - AWS revenue grew 17% year over year, reaching an ARR of over $123 billion, although it is growing slower than competitors like Google Cloud and Microsoft Azure [7]. - AWS has maintained strong operating margins of 37% over the last 12 months, contributing positively to Amazon's overall earnings growth [7]. Group 3: AI Integration in E-commerce - Amazon's e-commerce and media business will also benefit from AI, particularly in its advertising segment, which is growing at 22% year over year [8][9]. - A new AI tool for building advertisements has been released, allowing small businesses to create ads for various Amazon platforms, expanding the addressable market [9]. - AI can enhance Amazon's operations in robotics, delivery systems, and customer search, improving profitability in retail, which currently has a profit margin of 7.5% [10]. Group 4: Future Earnings Potential - Amazon's EBIT reached $77 billion in the last 12 months, with expectations for it to exceed $100 billion by 2026 as revenue growth accelerates and margins expand [12]. - A valuation multiple of 30 times trailing EBIT suggests a market cap of $3 trillion based on projected earnings [13].