Investing

Can Amazon's Market Value Hit Half A Trillion Dollars?

Douglas A. McIntyre

Published: May 15, 2016 8:41 am

Last Updated: January 13, 2020 8:04 am

At least one Wall St. analyst believes the value of Amazon’s (NASDAQ: AMZN) share prices will reach $1,000, up from $709. Its market value is currently $335 billion. Is half a trillion far away?

The arguments in favor of Amazon break into four pieces. The first is that part of the collapse in the revenue and forecasts of Macy’s (NYSE: M), J.C. Penney (NYSE: JCP) and Nordstrom (NYSE: JWN) last week were not just because of a weak environment. Amazon continues to take their business as it has for years. Part of Amazon’s run toward $100 billion in annual sales is the ruin of bricks-and-mortar. Wal-Mart Stores Inc. (NYSE: WMT) launched delivery aimed at Amazon, but it is too little too late, and lacks the e-commerce company’s bells and whistles

Part of those bells and whistles is Prime, which is not only a free delivery club. It gives the member access to a huge file of streaming video of premium content, music, and online storage. Anything Wal-Mart can do is well short of that

Amazon has a YouTube-killer, meant to draw video producers away from the huge Alphabet Inc.(NASDAQ: GOOGL) video website. YouTube is so huge, Amazon may have very little success. It is a sign of how far afield Jeff Bezos is willing to go in his attempt to flank other large, successful internet companies. Amazon is in the midst of trying other novel products and services, some of which will fail. The most visible is its use of drones as a means of delivery

And, Amazon’s most important weapon is its AWS cloud service operation. It is one of the oldest services in the sector, built due to overcapacity on Amazon’s servers, and has access to tens of millions of small merchants who already do business on its e-commerce platform

To get to a half a trillion in market cap, Amazon would need to have the run that Apple did for nearly three years. The drivers of the movement are already in place, as long as a fair portion of them are successful.