Can Amazon Stock Hit More All-Time Highs?

Shares of Amazon.com Inc. (NASDAQ: AMZN) have reached an all-time high of nearly $685. That gives the e-commerce business a market cap of $317 billion. The figure is 80% higher than that of Wal-Mart Stores Inc. (NYSE: WMT), the world’s largest retailer. There are reasons Amazon’s shares could continue to rise:

1. The relentless move of retail to e-commerce. Brick-and-mortar sales in the United States fell 10% over the Thanksgiving weekend to $20.4 billion. All retail sales for the U.S. holiday period are still expected to rise nearly 4%. Most if not all the increase will be due to online sales. While Amazon will not get all of that, its revenue and website traffic make its sales bigger than the online sales of all U.S. retailers combined.
2. E-commerce is being helped by a rotation to smartphone use. That means that online sales have stretched beyond desktops, which are not mobile. Consumers can buy products and services anywhere, and compare prices from retailer to retailer in real time. They can shop in stores and compare prices to those on Amazon instantly.
3. Amazon has products that other retailers cannot match. First among these is Prime, a combination of streaming media and free shipping, with a subscription price of $99 a year. Amazon also has its own television hardware and tablet products. While these may compete with companies like Apple Inc. (NASDAQ: AAPL), no brick-and-mortar retailer can match them.
4. Amazon has a brand that is associated, more than any other, with shopping online at the largest “store” in America. While other retailers have launched e-commerce sites, almost all still have brands related to physical store sales.
5. Amazon Web Services (AWS) is the largest cloud business in the United States. It produced $2 billion in the most recently announced quarter, and revenue grew almost 80% compared to the same quarter a year ago. The annual revenue run rate for AWS has to be well over $10 billion, on its way to $20 billion next year. Cloud computing is viewed by Wall Street as one of the most attractive businesses in terms of future revenue at the world’s largest tech companies.

Amazon won’t just make new highs. It will crash through them.

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