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Bernstein analyst puts a $1,000 target on Amazon

Shares of Amazon hit an all-time high Tuesday after Bernstein raised its price target on the company to $1,000, calling current consensus estimates "shockingly low."

The target is the highest of any firm listed on FactSet.

Bernstein upped its former $770 target, citing strong first-quarter results, a strong revenue trajectory from retail and cloud businesses and expanding gross margins. Shares of Amazon were up 3.4 percent Tuesday, closing at $703.07 after hitting an all-time high just above $699.

"Amazon does not trade anywhere near what we think it is worth on a fundamental basis," the Bernstein note said. "We are bullish in the short, medium, and long term and think we may see margins expand much faster than they have in the next two years than they have in the last two."

The note goes on to say that Amazon businesses are so large, fast-growing, and profitable that it is hard for the company to find new areas of investment to keep up with growth in gross profits.

J.P. Morgan reportedly had a $915 target on the stock, and both Susquehanna and Deutsche Bank were at $900, according to FactSet.

Meanwhile, the company announced a new investment Tuesday; a video competitor to YouTube, called "Amazon Video Direct." Amazon account holders can now upload original video and share in the revenue, adding to competition with Google's YouTube.

Victor Anthony, managing director and media analyst at Axiom Capital, said Tuesday's announcement should help fortify Amazon Prime membership and increase its value for customers.

"They're capitalizing on what I think is a move of media consumption," Anthony told CNBC's "Power Lunch." "I think that's contributing to the upside that you're seeing, it's a positive for the stock."

Bernstein's updated 2017 earnings forecast of $22.48 billion is 14 percent ahead of consensus. Its revenue estimates for 2016 are 2.7 percent ahead of consensus, and 4.9 percent ahead of consensus for 2017. Gross margin estimates are also above the rest of the Street by 154 basis points for the second quarter of 2016.

Amazon, the note said, shows little deceleration in the retail business as it continues to benefit from Prime. Foreign exchange is another tailwind underrated by Wall Street, according to the note.

Shares of Amazon are up 4 percent this year, and more than 60 percent year-over-year.