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Why Amazon shares could climb much higher

Amazon $1,000?

Shares of the e-retailer jumped 2 percent on Tuesday after JPMorgan raised its price target to $1,000 by December 2017, up from its previous target of $925 for December 2016.

"We believe Amazon continues to show strong ability to take share of overall eCommerce, and its flexibility in pushing first-party versus third-party inventory is a major advantage compared with other retailers," analyst Doug Anmuth wrote in a note published Tuesday.

JPMorgan rates the company as overweight, and notes its Amazon Web Services (AWS) cloud-computing services has proved successful.

And the charts may point to the same conclusion.

"The chart has been a terrific trending stock over the last several years," Craig Johnson, technical research analyst at Piper Jaffray, said Tuesday on CNBC's "Trading Nation."

"And at this point in time you can see a very well-defined channel that the shares have been in," Johnson said, adding that the charts may point to a price target of $875 to $900.

Larry McDonald, head of global macro at ACG Analytics, said now is not the best time to buy Amazon.

The company has over the years invested "heavily" in new vehicles of revenue creation and has at times not seen its return pay off, McDonald said Tuesday on "Trading Nation."

"The one consistent thing we've seen with Amazon the last 15 years, really, is they have a big capital expenditure investment cycle that repeats itself over and over again," McDonald said.

But when Amazon has historically gone "out of favor" at these times, according to McDonald, that is the best opportunity to buy its shares.

JPMorgan's bullish price target joins two recent calls of $1,000 or more; earlier this month, Evercore ISI raised its price target to $1,015 and RBC Capital raised its price target to $1,000. Analysts' average target price is $900.21, according to FactSet estimates.

Nomura on Wednesday resumed coverage of Amazon with a buy rating and a $950 price target, citing Amazon's focus on growing Amazon Prime memberships and investment in Prime Instant Video, as well as the company's "leadership in the cloud industry via AWS."

Evercore ISI analyst Ken Sena wrote in a note earlier this month that Amazon's venture into the cloud space and utilization of artificial intelligence has fueled the bullish sentiment. He reiterated the firm's buy rating.

"Not only are these advancements leading to higher overall customer satisfaction as delivery of food, packages, or other is becoming faster and more reliable, but we also see where many of the automation technologies are already offering quantifiable financial benefits," including savings in areas such as labor and improved inventory turns, Sena wrote in his note entitled, "AMZN - An Automated Vision of the Future."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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