Amazon (AMZN – Free Report) is now the second U.S. trillion-dollar company, trailing Apple (AAPL – Free Report), which crossed the threshold on Aug 2. Shares of AMZN jumped as much as $2,050.50 per share on the first day of trading in September, lifting the market cap of the e-commerce powerhouse to more than $1 trillion.

The recent rally was driven by a bullish call from analysts as well as earnings strength.

Bullish Calls

Morgan Stanley (MS ) last week lifted Amazon’s price target from $1,850 per share to $2,500 per share, citing huge growth for the e-commerce giant’s traditional retail as well as web service units. This represents the highest price target on the Wall Street. In fact, 31 of 47 analysts surveyed by FactSet have stock price targets above Amazon’s $1 trillion market cap threshold of $2,050.27.

According to Baron Capital analyst, Ashim Mehra, Amazon could double its value to about $2 trillion in three to five years driven by growth in advertising revenues and its cloud business.

Earnings Strength

Amazon delivered massive Q2 earnings beat of 103.61% and the biggest quarterly profit of $2.5 billion in its history, powered by the fast-growing cloud computing business and strength in online sales. Earnings per share came in at $5.07, more than double the Zacks Consensus Estimate of $2.49 and up significantly from the year-ago earnings of 40 cents. Revenues climbed 39% year over year to $52.9 billion but fell short of the estimated $53.4 billion.

In particular, revenues from the cloud computing business — Amazon Web Services (AWS) — surged 49% year over year to $6.1 billion. For the third quarter of 2018, the company expects total revenues to grow 23-31% to $54-$57.5 billion (read: 31 of 47 analysts surveyed by FactSet have stock price targets above Amazon’s $1 trillion market cap threshold of $2,050.27).

The Journey to the Trillion Dollar Club

Amazon went public in 1997 at $18 per share and took almost 21 years to achieve the trillion-dollar milestone, much faster than Apple, which took 38 years. Shares of AMZN rose to $100 by October 2009 and then crossed $1,000 on May 30, 2017. After 10 months on Aug 30, the shares hit another milestone of $2,000. In fact, Amazon was worth just $580 billion at the beginning of this year and has surged more than 70% since then.

Print Friendly, PDF & Email