Amazon has staged a remarkable turnaround, transitioning from the underperformer of the “Magnificent Seven” to a market leader in a matter of days. A stellar earnings report last Thursday ignited a 9.6% stock surge on Friday, followed by another 4.5% jump on Monday driven by a significant cloud deal with OpenAI. Previously lagging behind its Mag 7 counterparts in 2025, Amazon is now up over 16% year-to-date, hitting new all-time highs.
AMZN 5D mountain Amazon performance over 5 sessions
“Amazon just completely refuted” concerns about slowing growth in its cloud unit, Amazon Web Services (AWS), as stated on CNBC’s “Squawk on the Street,” following the announcement of OpenAI’s $38 billion commitment to utilize AWS cloud infrastructure for increased computing power. This partnership signifies a strategic shift for OpenAI, reducing its reliance on Microsoft’s Azure cloud service. Under the accord, OpenAI will immediately begin deploying workloads on AWS, leveraging hundreds of thousands of Nvidia GPUs across U.S. data centers. Starting with existing capacity, the collaboration will expand over time. AWS plans to develop targeted innovative infrastructure specifically tailored to OpenAI’s evolving computing needs.
“This deal is very exciting,” reflecting the positive perception of AWS’s resurgence in the cloud market. AWS growth accelerated to 20% in the latest quarter, up from 17.5% in the prior period, signaling renewed momentum.
Amazon is touting their own chips, but “a lot of it is because they have so much Nvidia compute,” during the Morning Meeting for Club members. AWS’s existing inventory of Nvidia specialized processors, critical for training and inference of AI models like ChatGPT, provides a competitive advantage. These GPUs enable the rapid training and deployment of large-scale AI systems.
While a rapid two-day rally might typically prompt some profit-taking, the current AI boom presents a different paradigm. The Mag 7 companies should not be viewed as a monolithic group; each possesses its own unique growth drivers and investment thesis. The old adage that the “Mag 7 is too much of the market, get out” is proving to be a flawed narrative.
Although the AWS deal’s hefty $38 billion commitment to cloud spending underscores OpenAI’s transition towards a multi-cloud approach. Prior to January, Microsoft held the position as OpenAI’s exclusive cloud partner. This evolved into a right of first refusal, which expired recently. Microsoft has reaffirmed its commitment to OpenAI with a substantial $250 billion investment to continue scaling on Azure, maintaining a significant role. OpenAI has also established cloud agreements with Google and Oracle.
The timing of the AWS deal coincides with Amazon’s intensified focus on expanding cloud infrastructure. During the company’s third-quarter earnings call, Amazon highlighted its dedication to accelerating capacity for AWS, aiming to double its overall capacity by the end of 2027. This substantial expansion includes investments in power, data centers, and chips, particularly its custom silicon like Trainium, and, of course, Nvidia GPUs. The company’s strategic investments in silicon are crucial as AI and generative AI adoption creates unprecedented demand for computing resources within the data center.
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