Jeff Bezos' Amazon.com Inc. (NASDAQ:AMZN) once nearly ran out of cash 24 years ago, during the dot-com bubble crisis of 2000. It was once reportedly left with just 10 months of cash, with its stock price plunging to $7 from $107.
Fast forward to 2024, Amazon is expected to have nearly as much cash on its balance sheet as rivals Apple Inc. (NASDAQ:AAPL) and Microsoft Corp. (NASDAQ:MSFT) combined by 2027.
What Happened: Amazon is projected to amass $127.4 billion in cash and short-term investments by the end of the year, according to S&P Global Market Intelligence, reported Business Insider.
This figure surpasses the cash reserves of tech giants Alphabet Inc. and Microsoft, which stand at $112.8 billion and $108.1 billion, respectively.
By 2027, Amazon's cash reserves are expected to approach $400 billion, a significant shift for a company traditionally focused on reinvestment rather than cash accumulation.
Wall Street is now speculating whether Amazon will follow in the footsteps of other tech companies by returning some of this cash to shareholders through buybacks or dividends.
Apple is projected to have a cash pile of $106.51 billion, while Microsoft is expected to amass $300.88 billion, putting the combined total at $407.39 billion for two of the world's most valuable companies by market capitalization.
For context, during the dot-com bubble crash in 2000, Amazon's stock plummeted and the company's cash reserves were falling, too. Bezos, though, was unfazed. "Well, we are a famously unprofitable company," he said.
"And that is a conscious strategy and an investment decision."
Why It Matters: Amazon's increasing cash reserves come at a time when the company is making strategic moves to bolster its market position.
Recently, Cathie Wood's Ark Invest made a significant investment in Amazon, purchasing 76,505 shares despite concerns about the company's growth trajectory. This move followed a Wells Fargo downgrade, citing slowing growth and increased competition.
Additionally, Amazon is preparing for the holiday season by boosting its workforce by 250,000 to meet the demands of the retail surge. This hiring spree highlights Amazon's commitment to maintaining its competitive edge in the retail sector.
As Amazon's cash reserves grow, the company faces pressure to balance reinvestment strategies with potential shareholder returns, a decision that could significantly impact its future financial trajectory.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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