Key Points
The roller-coaster ride of Space Exploration Technologies (NASDAQ: SPCX) is in a valley — and it probably won’t be the last of them. Less than a month after its record-setting initial public offering, SpaceX has repeatedly traded this week at levels below the $150 share price at which it opened its first trading day. As of Wednesday’s close, Elon Musk’s company was no longer a member of the $2 trillion club, as its market cap had fallen to $1.97 trillion. It edged back in (barely) on Thursday, but its hold on membership is looking tenuous at best.
Investors who bought in during those first heady days when SpaceX stock surged to a peak above $225 have to be disappointed, but they shouldn’t be surprised. IPO stocks are notoriously fickle, and many tend to fall after the FOMO surge fades. Expect the volatility to continue as SpaceX is added to index funds (a tailwind), lockup periods expire (a headwind), and the company starts reporting quarterly earnings.
There are now just six companies with market caps that are comfortably above $2 trillion, and I think all of them are safer investments than SpaceX stock. But the best buy among them, in my view, has to be Amazon (NASDAQ: AMZN).
Why Amazon is a top $2 trillion company
Amazon has been having an up-and-down 2026. The stock is up only 5.3% so far this year, even as the benchmark S&P 500 (SNPINDEX: ^GSPC) has gained almost twice as much. Its shares are also down 11% from the all-time high they hit earlier this spring.
AMZN data by YCharts.
Part of the problem for Amazon stock is that investors have grown nervous over the scale and cost of the hyperscaler’s AI data center build-out. Amazon Web Services (AWS) has the largest market share in the global cloud computing market, at 28%. Amazon wants to keep that lead, but doing so is expensive.
Amazon has projected that it will spend a whopping $200 billion just this year on AI infrastructure, with much of that money going to AI-capable processors that have relatively short usable lifespans. GPUs may be able to operate for five or six years, but with Nvidia putting out a new architecture every year, they could reach obsolescence in two or three. Those timelines are raising many questions among investors about whether Amazon will be able to generate sufficient profits from its spending to make its investments in them worthwhile.
CEO Andy Jassy told analysts on the company’s most recentearnings callthat management is confident that its investments will pay off.
“Of the AWS capex we intend to spend in 2026, much of which will be installed in future years, we have high confidence this will be monetized well, as we already have customer commitments for a substantial portion of it, and that it will yield compelling operating margins and ROIC [returns on invested capital],” he said.
So far this year, Amazon has announced new AWS agreements with Nvidia, Meta Platforms, OpenAI, Anthropic, Southwest Airlines, Cerebras Systems, and more. AWS net sales in the first quarter were $37.58 billion, up 28% from a year ago. Its custom chip business, which includes its Graviton, Trainium, and Nitro products — grew by a triple-digit percentage, and its annual revenue run rate now exceeds $20 billion.
So, while Amazon is spending heavily, the company already has a dominant position in cloud computing and is expanding its revenue streams with custom chips and greater computing capacity. Its investments may be challenging for investors to stomach today, but the business opportunity it is pursuing is too enticing to pass up.
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Patrick Sanders has positions in Nvidia. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Nvidia. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.
