Amazon’s stock on Tuesday topped the $1 trillion mark, becoming the second American company in history to surpass the milestone. Apple became the first $1 trillion company last month.
Amazon’s stock price hit $2,049 per share late Tuesday morning before dropping back down. It closed near $2,040, which put the company’s total market value at $995 billion.
What did it take to get here? The threshold is indicative of the tangible success Amazon (and Apple) had had over the years. In July, Amazon recorded quarterly profits of more than $2 billion for the first time in its history. The company has seen three straight quarters of profits over $1 billion.
How big is $1 trillion? There are many different ways to think about the milestone. One trillion is nearly three times larger than the net worth of ExxonMobil, the largest oil and gas company in the U.S.
Thinking about it in terms of your own income: The average American makes about $59,000 per year. On that salary, it would take about 16.9 million years to make $1 trillion.
Or, using the average U.S.home price of $200,000: it would take 5 million homes to equal $1 trillion.
Does this milestone matter since Apple got there first? Yes and no.
Everyone would like to be first, said Ivan Feinseth, the chief investment officer at Tigress Financial Partners. But Amazon has still come a long way.
In 2001, the company’s stock was worth only $9 per share. As the story goes, Amazon CEO Jeff Bezos wrote on a whiteboard, ‘We are not our stock price,’ making the point that he believed the company’s stock value was not reflective of the work his team was doing at the time.
“Now, the results of all of their success has paid off,” Feinseth said.
Also, as Reuters points out, it took 21 years for Amazon to reach the $1 trillion mark; it took Apple nearly 38.
Will Amazon’s stock keep going up? It’s impossible to predict, but Feinseth, who invests in Amazon’s stock for his clients, said he expects the company’s shares will continue to climb. The stock market is doing well overall. Plus, “momentum begets momentum,” Feinseth said.
Additionally, investors could see Amazon’s stock doing well and want to jump on the bandwagon, which pushes the stock price higher.
Amazon’s underlying business indicators also bode well. The company is investing heavily in areas with significant potential for growth, such as web services and the grocery market.
Who’s next? Microsoft and Google are the next two companies closest to topping $1 trillion.
Microsoft is valued at $856 billion, and Google’s parent company Alphabet is valued at $838 billion. It is not a coincidence the most valued companies in the world are all in the tech industry.
“Tech is where the innovation is,” Feinseth said. “Not only are technology companies growing. They drive the growth of our whole economy.”
But economists have concerns about this kind of tech growth, too — namely, that it’s hurting wage growth and widening income inequality.