A hedge fund manager thinks Amazon could be worth $3 trillion

Hedge fund manager Chamath Palihapitiya really likes Amazon.

Palihapitya, the CEO of the hedge fund Social Capital, believes that the company will be a $3 trillion company a decade from now.

Palihapitya said that the company’s retail value will be worth $1 trillion as of 2025, its Amazon Web Services business will be worth $1.5 trillion, and there is another $0.5 trillion in the magic that Amazon CEO Jeff Bezos brings to the company.

On the retail side, Palihapitya said that the company is growing its Prime memberships at such a rate that it will explode over the next 10 years.

Palihapitya then said that if you use Costco’s current multiple, that business looks to be worth around $1 trillion.

Palihapitya called AWS a tax on the internet and innovation. Since all internet-based companies need servers and web hosting, AWS will corner that market and add more and more onto the business.

“There are going to be unbelievable number of losers when AWS gets to scale,” said Palihapitya

Palihapitya said that the price to earnings ratio for that business should be similar to Oracle and IBM, which puts the market cap at $1.5 trillion.

Palihapitya then said that Bezos’ management style, investing in the business and inventing things, will add another, currently unseen $0.5 trillion to the market cap.

Palihapitya said that he thinks Bezos is building the “most durable company in the world.”

More to come…

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

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