Amazon started out as a book retailer in 1994 and has transformed over the past 2 decades into a massive technological beast! Not only has Amazon dominated the retail market (it took roughly 44% of all online sales for the 2017 Christmas season), but it has released countless products that have generated significant sales for the company (e.g Amazon Kindle, Echo, etc). Even with it’s current dominance in the retail industry, many pundits still believe that there is room for growth in the retail industry for Amazon. Only a few months ago, Amazon purchased Whole Foods , directly becoming a threat to supermarket chains such as Walmart.
In addition, the company has also ventured into various type of services such as video services and more recently, Cloud Computing.
Cloud Computing has been a huge winner for the company. Amazon’s first Cloud Computing service was alunched in 2006 and every year, new cloud computing services are added to the Amazon’s Web Services. More and more companies are moving their systems into the cloud and there is no doubt that there is still room for growth in the sector. Amazon currently dominates this space, and generated $4.51 bln from this segment in it’s last quarter alone.
The growth of earnings from the Cloud, is one of the main reasons why the share price has increased of over 50% over the last year alone.
Will the share price rise continue? At a current market cap of about $630 bln, is it possible for Amazon to overtake Apple (~$850 bln) as the most valuable company? If Amazon’s market capitalization increases by 35%, this could become a reality.
My view is that Amazon is not only poised to become the most valuable company, but can achieve this in the near future. Cloud computing will certainly continue to be a massive money earner for Amazon and Amazon’s CEO is interested in being involved in even more sectors such as health and virtual reality that can potentially result in even more revenue in the coming years.
And I’m not alone in this view; the current share price is hovering around $1300 and some target prices are being set as high as $1600!.
It’s up to you to buy or not to buy, but it looks like Amazon is heading in one direction to me; it’s on the way up!
