3 Reasons Why Amazon Is Going to $1,000

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By Tom Taulli, InvestorPlace Writer & IPO Playbook Editor

Since the dawn of the Internet Age in the mid-1990s, hundreds of dot-coms have come and gone. But Amazon.com, Inc. (NASDAQ:AMZN) has built a lasting empire — and made many people very rich in the process. Amazon stock has logged an astounding 47,000%-plus gain during its existence, and it’s now worth $387 billion by market capitalization.

And yet, AMZN still feels like a scrappy startup. During the past 12 months, it has been one of the biggest gainers among large-cap stocks (up roughly 55%). EvenFacebook Inc(NASDAQ:FB) has only gained 40% in the past year. And it has done so not just on the back of its giant retail operations, but thanks to explosive growth in cloud services and expansion in streaming video.

Can Amazon stock keep up the momentum? JPMorgan certainly thinks so — its analysts boosted their price target on AMZN from $925 to a nice, clean $1,000. That would be a return of more than 20% from today’s prices.

I’m completely on board with JPMorgan’s bullishness on Amazon stock. Here are three reasons why:

#1: Amazon, The E-Commerce Juggernaut

Amazon has spent billions of dollars building its e-commerce platform — not just website development, but building warehouses, installing logistics systems and even deploying robots. AMZN also was smart in developing the Prime program — not just for the one-hour delivery, but because add-on services such as music and video help engage users.

All in all, Amazon has built an enormous moat that most rivals can’t touch. According to eMarketer, AMZN controls nearly three-quarters of the U.S. e-commerce market.

Wal-Mart Stores, Inc. (NYSE:WMT)? Try 3%.

E-commerce still is a growth market, too. Based on research from Forrester, e-commerce sales are forecast to improve from $344 billion in 2015 to $480 billion by 2019. Consumers are shifting their buying habits, moving away from traditional brick-and-mortar operators like Macy’s, Inc. (NYSE:M) to digital platforms.

Amazon stock should reap the benefits this holiday season, just like the rest. In anticipation of the spurt in revenues, AMZN has opened 18 new fulfillment centers, up from just six last year.

It’s just prudent planning. After all, Signal and Shift Communications say about 43% of internet users already are thinking about using Amazon as their primary holiday shopping source.

Amazon Web Services (AWS)

One longstanding knock against Amazon stock was the company’s long history of net losses. But these are becoming a thing of the past. For the past five quarters, AMZN has pumped out profits — including three quarterly earnings that reached record levels.

Yes, the aforementioned e-commerce business remains a low-margin category. But Amazon is countering that with its high-margin Amazon Web Services (AWS) platform, which provides cloud services to businesses.

In the latest quarter, AWS revenues spiked from $1.82 billion to $2.89 billion. That’s nice. Operating income came to a $718 million. That’s just flat-out juicy.

The cloud market represents a megatrend in the tech industry. The technology tends to be cheaper than legacy systems, but allows for better analytics and training with less overall maintenance.

Amazon isn’t alone. Alphabet Inc (NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT) are ramping their cloud efforts, too. The prospects look bright for this part of the market, with Morgan Stanley predicting that global spending will jump from $70 billion last year to $141 billion by 2019.

Jeff Bezos Has Been Great for Amazon Stock

Jeff Bezos is one the world’s best CEOs. During the past two decades, he has fended off scores of tough competitors (and even buried a few), and survived grueling recessions and tech busts.

A key to his success has certainly been the undeniable focus on his customers. He once summed up his thinking with this little phrase: “Put the customer first. Invent. And be patient.”

Bezos hasn’t won on every front, of course. Anyone remember the ill-fated Fire Phone? But innovators rarely have unscathed records, and Bezos has plenty of success — like the Kindle and Echo — to make up for the failures.

Bezos also has a good sense of finding breakout opportunities, such as AWS, which he built from scratch and turned into a cash cow in roughly a decade.

That’s ultimately what will move the needle for Amazon stock.