As Wall Street counts down to Amazon's earnings results on Thursday, expectations are running high.
The company said it had its best-ever holiday season in 2016 and shipped more than 1 billion items worldwide, but that is unlikely to remain on the books for long, said Nomura analysts Anthony DiClemente.
CEO Jeff Bezos' spending on Indian expansion, new fulfillment centers, logistics and leasing airplanes — among other things — will have a bearing on expense growth this year, he said. (DiClemente has a buy rating on the stock and a $950 price target.)
Amazon is expected to report a 25 percent increase in fourth-quarter sales to $44.7 billion when it reports earnings after the close of trading on Thursday, according Thomson Reuters. Earnings per share is expected to increase to $1.35 from $1, thanks to rising profit at the cloud computing business Amazon Web Services (AWS).
As with Facebook, which reported earnings on Wednesday, investment could hold back margins and operating income in 2017, he said. The exception will be Amazon's cloud business AWS, where margins will continue to expand, he said.
For example, Amazon is over-paying for video right now because people who sign up for Amazon Prime tend to spend a lot more on the company's retail platform, he said. "Right now, it's hard to see those returns," he said.
DiCelmente recommends investors buy Amazon and hold the stock for 10 years. For more near-term returns, there's more upside for companies like Facebook and Alphabet's Google, he said.
Still, value investor Bill Miller told CNBC the value of Amazon's business "should double" over the next three years.
"That's a big position and has been for a long time," he said. "If you think about Amazon and compare it to Facebook and Google — both of which are great companies — those companies are addressing global ad markets about 500 to 600 billion. U.S. Retail alone is 5 trillion, AWS is trillions."