During Amazon's second quarter conference call, management said growing Prime adoption was one factor behind acceleration in domestic and international revenue growth. Second quarter 2015 sales increased 20 percent from the prior year to to $23.18 billion, exceeding expectations.
Amazon said Prime is benefiting from a "flywheel" effect.
Essentially, it's becoming more attractive to customers as it grows the number of items available for two-day shipping. That in turn is causing more vendors who want their products to be eligible for Prime status to participate in Amazon's fulfillment. Prime then becomes even more attractive to customers, feeding a cycle of momentum.
Investors still need to take a long-term perspective on shares of Amazon, Mahaney said. The stock has traded at a lofty average of 35 to 40 times forward earnings since 2007, according to RBC.
"The market is willing to and should be willing to look out several years and look at these pools of profit that they're building up in their core retail business and in AWS," Mahaney said, referring to Amazon Web Services, the company's cloud-computing business.
"You do that, you discount it back, you can get to materially higher price levels from where the stock is today."