Analyst Says Amazon Stock Could Double
Amazon.com, Inc. (NASDAQ:AMZN) is a known winner. The company is famous for its takedowns of the publishing industry, brick-and-mortar retailers, and traditional IT firms. All those victories have pushed Amazon stock to $764.00, but value investor Bill Miller thinks that’s just the beginning.
In fact, Miller thinks that Amazon stock could “double in three years.” (Source: “Amazon shares could double in three years, Bill Miller says,” CNBC, September 13, 2016.) Miller is the chief investment officer of LMM Investments, and made his bullish remarks during the Delivering Alpha conference hosted by CNBC and Institutional Investor magazine.
Although Amazon stock grew more than 44% over the last year, Miller still thinks there is a ton of room to the upside. In fact, he thinks that Amazon stock is likely to outperform the competition, including other tech giants like Alphabet Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB). Their advertising-based business models are more constrictive than Amazon stock’s e-commerce market.
The firm’s revenue growth is expected to continue rising, as is the profitability of “Amazon Web Services,” the company’s cloud computing arm. Miller thinks these forces could converge to an inflection point that would send Amazon stock soaring toward $1,500.00 per share.
At that price, the company would (assuming it does not issue new shares along the way) have a market cap of $713.7 billion. It’s not an unreasonable estimate, considering that Amazon pushes into new business areas and wins those markets.
Miller is far from the only bull on Amazon stock. For instance, the Massachusetts Institute of Technology’s renowned MIT Technology Review put Amazon stock atop its “Smartest Companies 2016” list. It’s an extremely high honor, which shows that Amazon is still tapping into new areas of growth. In particular, the MIT Technology Review mentioned Amazon’s artificial intelligence (AI) program, “Alexa,” as a serious tailwind for the stock.
“Last year we included Amazon on our list of the 50 Smartest Companies for incorporating robots into its fulfillment centers,” wrote the MIT Technology Review. “This year the standout is the surprising success of its Alexa Voice Service and the growing family of devices it powers (the Amazon Echo, Echo Dot, and Tap).”
They seem impressed that Amazon is already monetizing its artificial intelligence software. Although competitors like Alphabet, also known as Google, have made huge strides in AI, they have yet to capture any revenue from that research. Perhaps Miller believes this early-mover advantage can help drive Amazon stock to $1,500.00.
What I find interesting is that Amazon stock creates a “halo effect.” In other words, companies that supply to Amazon get a boost from its success. For instance, one microchip maker that provides parts for Amazon’s data centers has doubled in the last two years. This company is poised for massive gains! If you want to learn more, click here.