Amazon.com Inc. (NASDAQ:AMZN) could see its market capitalisation reach US$1.6trn by 2025 on the back of its retail expansion in the US, according to an analyst at MKM Partners.
MKM’s Rob Sanderson said the company has taken over 15.5% of the US retail market, in part due to its Whole Foods Market Inc (NASDAQ:WFM) acquisition.
The analyst also expects the Amazon Web Services (AWS) cloud computing division to achieve a 20% compound annual growth rate of 20% over the next eight years.
Sanderson gave Amazon a ‘buy’ rating and a target price of US$1,275. His expectation for a US$1.6trn market valuation in less than a year would make chief executive Jeff Bezos’s stake worth US$250bn.
But Sanderson said the estimated valuation is conservative, nothing that it takes into account that Amazon’s retail growth in the US will likely slow to a three-fold increase within nine years following a 900% surge over the past nine years.
He sees the international retail business becoming just as valuable as its US retail arm over that time and considers the AWS division “the largest redefinition of computing since the PC era”.
In previous a note to investors in August, Sanderson the company’s recent financial performance should be ignored as management is spending large to support growth in the long-term.
He also compared Amazon to Apple in the note. He said unlike Amazon, Apple has not reinvested the massive amount of cash generated from its one-time dominance in the smartphone market.
Shares in Amazon dipped 0.28% to US$979.47 each in US pre-market trading.