- JPMorgan says Amazon’s market value could eventually grow to more than $US1 trillion.
- The firm says Amazon is “investing in more major growth opportunities than any other company.”
- The stock would have to surge 66% from today’s levels to achieve a 13-digit valuation.
Amazon is already the fourth-highest valued company in the US market at $US602 billion, but JPMorgan has its sights set much higher.
“We believe Amazon has the potential to be a $US1 trillion dollar company over time, as it remains early in the e-commerce and cloud secular shifts,” JPMorgan analyst Doug Anmuth wrote in a client note. “And in our view, Amazon is investing in more major growth opportunities than any other company we cover.”
That’s lavish praise, and quite a lofty outlook – one JPMorgan thinks Amazon can achieve through the right mix of positive catalysts, which it outlines as follows:
- Numerous major growth opportunities, which will drive revenue, along with better margin flow-through in 2018
- Margin expansion despite hefty internal investment, driven by the “ongoing third-party mix-shift” and outsize Amazon Web Services and advertising growth
- Amazon Prime subscription growth and expansion into new markets – JPMorgan has an estimate of 95 million global subscriptions
- Amazon Web Services will maintain its strong 75% market share, with only a modest revenue deceleration
- More international retail revenue, driven by India and recent market launches in Australia and Brazil
- “Outsized” growth from newer revenue streams, like advertising, grocery, and Alexa/Echo products
Anmuth has a long-standing overweight rating on Amazon’s stock, but he just raised his price target on the company to $US1,385 a share, up from $US1,375. While he’s not the most bullish analyst, Anmuth’s estimate is still 5.3% above a consensus estimate that factors in forecasts from 42 firms.
While shareholders would surely rejoice at an eventual 13-figure valuation for Amazon – which would require a gain of roughly 66% from today’s levels – no one would benefit more than founder and CEO Jeff Bezos, who was recently crowned the richest person in world history. If the stock achieves the full potential seen by JPMorgan, Bezos would hold an even more unprecedented level of wealth.
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