Shares of tech giant Amazon (AMZN 1.40%) have rallied sharply in recent weeks, climbing to fresh all-time highs after the company reported its first-quarter results late last month. With the stock up about 27% over the past month, some investors may worry they have already missed the move.

But a closer look at the underlying business suggests the story may just be getting started.

Two of the company’s growth engines, in particular, are gaining steam at the same time: Amazon Web Services (AWS) and the company’s custom silicon operation. AWS is seeing accelerating growth, and Amazon’s chip business — once a curious side project — has quietly grown into one of the largest data center semiconductor operations in the world.

So, with shares now near record highs, is there still room for investors to participate?

AWS is revving up

Amazon’s first-quarter revenue rose 17% year over year (or 15% excluding favorable foreign exchange) to $181.5 billion. The standout figure, however, was AWS (Amazon’s cloud computing business), where revenue jumped 28% year over year to $37.6 billion. Putting this in perspective, AWS revenue growth has now climbed from 17% to 20% to 24% to 28% over the past four quarters — a clear acceleration on a base that is approaching $150 billion in annualized run rate.

And Amazon’s operating income tells a similar story. Total first-quarter operating income rose to $23.9 billion — up from $18.4 billion in the year-ago period, with AWS contributing $14.2 billion of that profit — about 59% of the total despite making up just 21% of sales.

CEO Andy Jassy spoke to the broader pipeline behind the momentum.

“AWS is growing 28% (our fastest growth in 15 quarters) on a very large base, our chips business topped a $20 billion revenue run rate (growing triple digits year-over-year),” he said in the company’s first-quarter earnings release.

The cloud unit’s AI-related revenue alone is now running at more than $15 billion annualized. And the segment’s total backlog reached $364 billion at quarter-end — and that figure doesn’t even include a recently announced Anthropic agreement that Jassy said is worth more than $100 billion.

The chip business is becoming a moat

The bigger surprise — and arguably the more durable advantage — may be Amazon’s custom silicon. The company’s combined Trainium, Graviton, and Nitro chip operation crossed a $20 billion annualized run rate in the first quarter, with sequential growth of nearly 40%.

And Amazon’s Trainium chips have secured $225 billion in revenue commitments.

Jassy went further during Amazon’s first-quarter earnings call.

“If our chips business was a stand-alone business and sold chips produced this year to AWS and other third parties, as other leading chip companies do, our annual revenue run rate would be $50 billion,” he said.

He added that, as best the company can tell, this would now make it one of the top three data center chip businesses in the world.

Amazon

Today’s Change

(-1.40%) $-3.85

Current Price

$271.14

Of course, there are some notable risks. Amazon’s capital expenditures hit $43.2 billion in just the first quarter — and trailing 12-month free cash flow shrank to about $1.2 billion as the company races to build AI capacity. If demand cools or if competing chip platforms close the price-performance gap, the payoff window for all this spending could stretch out.

But at a price-to-earnings ratio of about 32, the stock looks reasonable for a business with a reaccelerating cloud platform, a top-three data center chip operation, an advertising business that has crossed $70 billion in trailing 12-month revenue, and an e-commerce business that is still growing at a double-digit rate.

Even after the recent run, I think Amazon stock remains attractive. The moat appears to be widening, and investors don’t have to pay an AI-hype premium to own it.