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Did Amazon just become a defense stock with this $158 million contract?

Did Amazon just become a defense stock with this $158 million contract?

Though not yet truly viral, a meme format based on the observation that every major U.S. company is in some way involved with the country’s military-industrial complex has been gaining popularity.

Amazon’s Web Services (AWS) have lent additional credence to the observation with the November 25 news the e-commerce and technology giant received a $158.25 million contract to provide the U.S. Army with cloud services.

The contract is set to last until 2028, though the other details are vague at press time. 

While Amazon (NASDAQ: AMZN) is not as well-known as some other major corporations, such as Boeing (NYSE: BA), Palantir (NASDAQ: PLTR), and Oracle (NYSE: ORCL), as part of the wider armed forces network, it has been part of the military infrastructure for some time.

The other most recent example of the company’s work with the American military came from another AWS contract with the army – announced in June 2024 – and valued at $114 million.

Amazon’s troubled initial attempt to join the defense industry

Though individually, the military contracts are minuscule compared to AWS’ total annual revenue and are absolutely dwarfed by Amazon’s total revenue, their numbers and the influence they likely provide make them an important part of the e-commerce and technology giant’s business.

The importance of such agreements is perhaps best seen in the controversy that emerged from Amazon’s original attempt to become a defense stock: the 2019 Joint Enterprise Defense Infrastructure (JEDI) contract.

JEDI was to be worth $10 billion over 10 years and was widely seen as tailor-made for Amazon. Still, it was quickly contested by Oracle and eventually given to Microsoft (NASDAQ: MSFT) – allegedly in part due to President Donald Trump’s dislike of Jeff Bezos, the owner of The Washington Post.

The major contract was again disputed after the fact and ultimately scrapped and replaced by the Joint Warfighter Cloud Capability (JWCC)—a $9 billion contract shared between Amazon, Google, Microsoft, and Oracle.

Amazon stock price performance

No matter where Amazon’s dealings with the U.S. Department of Defense (DoD) eventually lead, it is evident the company’s core business and AWS have been doing well through 2024 and have already been significantly boosted by the ongoing artificial intelligence (AI) boom.

Indeed, AMZN shares are 33.66% in the green year-to-date (YTD) and, at Amazon stock price today of $200.40, they are trading just some $15 shy of their all-time high (ATH), reached earlier in November.

AMZN stock YTD price chart. Source: Finbold

Additionally, despite entering a correction after the strong rally they entered after Donald Trump was re-elected president, Amazon shares appear to have started stabilizing, likely indicating a continued rally towards the year’s end.

Featured image via Shutterstock

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