Amazon is poised to continue dominating the online retail space for a very long time according to Wall Street firm MKM Partners. The tech giant will also grow its cloud computing market share in the years to come, a situation that will see a leap in the company’s valuation.
Based on these indicators, the firm stated its buy recommendation for the e-commerce giant. In a note to clients sent out Thursday, Rob Sanderson, an analyst at the firm said that their projection was for Amazon to exceed $1.6 trillion in valuation over the next 7-8 years and advised the online giant to “continue deploying all available capital until reinvestment opportunities become more limited or more risky.”
Amazon has had a bullish year so far with a rally of 29 percent on its shares. This is in contrast to the 10 percent return realized on the S&P 500. According to FactSet, Amazon’s market value stood at $465 billion as of Wednesday.
Sanderson reaffirmed his projection for Amazon’s price to hit $1,275 or a 32 percent rise.
He added that Amazon’s share of U.S. retail spending stood at 5.1 percent representing a nine-fold rise from 2008 to 2016. His prediction is for the online titan to achieve 15.5 percent retail spending share by the year 2025 and eventually leap past Wal-Mart.
Sanderson was upbeat on the outlook for cloud computing, saying that Amazon Web Services has the capacity to grow its sales by 20 percent every year for the next eight years.
He further said that Amazon Web Services is on a path of extraordinary growth that’s more rapid in comparison to Microsoft’s journey towards dominating the personal computer where the growth at the peak of its core technology averaged 20 percent every year for 23 years. He added that there will be notable reallocation of value across the tech landscape with cloud computing redefining computing in ways never seen before.