Here’s How Amazon Can Become the First $1 Trillion Company

amazon-amzn-logoAmazon.com, Inc. (NASDAQ:AMZN)’s focus on top-line growth has paid off handsomely, and the company’s combination of retail dominance, cloud infrastructure, and international growth could propel it to unforeseen heights.

As big as Amazon’s business already is, it still represents only a sliver of the retail pie. From the Motley Fool:

Researcher eMarketer estimates that by 2018, global retail sales will surpass $28 trillion dollars, but e-commerce will represent only 5.5% of those sales. Through programs like AWS or its rumored global logistics service, Amazon continually finds ways to lower its cost basis. This virtuous cycle — known as its Flywheel strategy — enables Amazon to compete for ever-greater pieces of e-commerce market share. This enduring trait should help allow Amazon to continue to consolidate e-commerce market share for the better part of the next generation. I see few reasons Amazon cannot or will not become the online Wal-Mart to the world, even as Wal-Mart itself finally gets its act together to challenge Amazon.

Amazon is no longer just a retailer, either. While rivals like Wal-Mart have played catch-up in the e-commerce space, AMZN has broadened its business offerings. The company makes its own tablets and set-top boxes, for example, and has invested heavily in cloud offerings for businesses:

Amazon’s AWS cloud business enjoys massive growth potential. IDC estimates the market for corporate spending on infrastructure-as-a-service (IaaS) spending alone will reach $141 billion by 2019. Considering Amazon’s AWS just reached a $10 billion annualized run rate, Amazon’s leadership space in the cloud combines with its e-commerce growth opportunity to create a company with a long-term growth horizon that should be able to power its market capitalization upward for years and years to come.

Amazon is also investing heavily in video games, and its international growth is very impressive. Now poised to grow profits at a breakneck pace (not just revenues), the company is making a strong case to become the world’s first $1 trillion company.

That would mean nearly tripling its current share price to $2,100 per share. Don’t laugh — Amazon stock actually grew by that exact amount over the past five years.

Amazon shares fell $0.83 (-0.11%) to $763.80 in premarket trading Thursday. AMZN stock has risen 13% since the start of 2016%, nearly doubling the performance of the S&P 500 in the same period.

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