Amazon.com Inc. shares notched their first record close in more than 10 months Tuesday, when a new chief executive was welcomed by news that the Department of Defense canceled a $10 billion contract that Microsoft Corp. had won instead of Amazon.
Shares of Amazon AMZN, +4.69% rose 4.7% in Tuesday’s session to finish the day at $3,675.74, topping the previous closing record of $3,531.45, established on Sept. 2, 2020. The rally, the biggest gain in the S&P 500 SPX, -0.20% on Tuesday, also marked the best single-day percentage gain for Amazon’s stock since Nov. 4, 2020, the day after the U.S. presidential election. At the day’s closing price, Amazon was worth roughly $1.85 trillion, a market cap that in the U.S. trails only Big Tech’s two $2 trillion behemoths, Apple Inc. AAPL, +1.47% and Microsoft. MSFT, +0.00%
Amazon had been widely expected to win the Department of Defense’s JEDI Cloud contract before the contract was awarded to Microsoft in 2019, according to Bernstein analyst Mark Moerdler. Amazon charged in court that former President Donald Trump intervened to make Microsoft the winner due to his personal distaste for Amazon founder Jeff Bezos, who is also the owner of the Washington Post.
“Unfortunately, the contract award was not based on the merits of the proposals and instead was the result of outside influence that has no place in government procurement,” an Amazon spokesperson told MarketWatch, noting that the company agrees with the Department of Defense’s Tuesday decision.
Microsoft said in a Tuesday blog post that “it’s clear the DoD trusts Microsoft and our technology.” The company is “confident that we’ll continue to be successful as the DoD selects partners for new work.”
The Department of Defense plans to solicit a new contract, the Joint Warfighter Cloud Capability, with Amazon and Microsoft competing for the job.
“We believe this is a clear positive for Amazon and potentially negative for the third-party data centers,” Raymond James analysts wrote in a note on the decision Tuesday. “We believe the shift to Amazon further cements its position as a leading cloud provider, particularly to government agencies.”
Tuesday also marked the beginning of a new era for Amazon. Bezos stepped down from his role as CEO on Monday and officially passed the helm to Andy Jassy. Cloud computing should remain a key focus for Amazon under Jassy, who formerly headed Amazon Web Services and built it into a cloud juggernaut.