Brett Schafer, The Motley Fool

Wed, Jun 4, 2025, 1:20 AM5 min read

• Amazon's growth in AWS is being propelled by AI.

• It should also see a boost from AI for its e-commerce and shipping divisions.

• Apple has failed to demonstrate a coherent AI strategy and will struggle to keep growing revenue.

• 10 stocks we like better than Amazon ›

So far, Apple's (NASDAQ: AAPL) efforts in artificial intelligence (AI) have underwhelmed investors, and it's fair to say that no one thinks it's taking the world by storm with this particular technology. Its Apple Intelligence initiatives are not getting nearly the buzz that competitors' products are receiving, and it seems that its other AI-related products (advanced AI chips, for example) are still in development or getting little fanfare. The market is clearly underwhelmed as Apple -- recently the most valuable company in the world -- has fallen behind Microsoft and Nvidia in market capitalization.

The next company to overtake Apple could be Amazon (NASDAQ: AMZN). Apple's market cap is in a slow decline and currently sits at $3 trillion, while Amazon has risen to $2.18 trillion and is in a leading position to take advantage of AI spending from both a consumer and cloud computing standpoint.

I predict Amazon stock will surpass Apple in market capitalization by the end of 2025. Here's why.

Amazon is betting big on AI to help its Amazon Web Services (AWS) cloud computing division. It is planning $100 billion on capital expenditures this year, mainly for AWS.

The partnership/investment in leading AI start-up Anthropic is showing signs of bearing fruit, with Anthropic's revenue growing at a blistering pace and spending a ton of money on AWS products.

Last quarter, AWS revenue grew 17% year over year to $29.3 billion, but it was constrained by supply restrictions, according to Amazon management. Over the next year, I expect revenue at AWS to accelerate as more and more cloud computing infrastructure becomes available.

Over the last 12 months, AWS generated $42 billion in operating income, which is over half of Amazon's total profit. Expect this figure to grow substantially over the next few years.

There is another side of the Amazon empire that can use AI: online shopping. The company is employing AI to upgrade its entire vertically integrated e-commerce network. This starts with AI-enabled robots and shipping from warehouses, AI-generated advertisements for merchants, and AI-enabled shopping tools to help consumers find what they want on Amazon's infinite marketplace.