The importance of online retail and Amazon's dominion over e-commerce have no end in sight, according to J.P. Morgan.
Citing Amazon's growing market share and the success of Amazon Web Services, analyst Doug Anmuth argued that Jeff Bezos' retail giant is only just getting started.
"We believe Amazon is well positioned as the market leader in e-commerce, where it's still early days with U.S. e-commerce representing about 12 percent of adjusted retail sales (ex-gas, food, and autos), which we view as likely going to 30 percent over time," Anmuth wrote Monday. "We believe Amazon continues to show strong ability to take share of overall e-commerce, and its flexibility in pushing first-party vs. third-party inventory and its Prime offering both serve as major advantages."
As one of Main Street's largest disruptors, Amazon roared through 2017 by keeping pressure on traditional brick-and-mortar retailers, sending entire industry groups tumbling after it acquired Whole Foods Market over the summer. Though countless companies have shed share value, Amazon's stock has climbed more than 58 percent since January, one of the best large-cap performances this year.
Anmuth's new $1,375 price target on Amazon shares is 17 percent higher than Friday's closing price. Shares closed up 1 percent Monday.
Though it is known for pairing consumer goods with logistical prowess, Amazon has seen significant growth in its cloud platform, known as Amazon Web Services. As a secure cloud services platform, AWS offers its users computing power, data storage and content delivery to help scale businesses, according to its website.
"We believe AWS is the leader in the public cloud with roughly 75 percent U.S. market share, and it remains early with only about 10 percent or more of workloads in the cloud today and the pace of cloud adoption accelerating in our view," explained Anmuth. While the analyst offered positive outlook on Amazon, he also remarked on social media companies Twitter and Facebook and on Priceline.
Calling Twitter one of J.P. Morgan's best ideas in 2018, Anmuth upgraded shares and raised his price target on the popular platform to $27 from $20, implying 21 percent upside over the next 12 months. After an unimpressive start to the year, Twitter staged a 43 percent climb in the past six months — a trend the analyst believes will continue with daily active user growth and scaling ad revenue.
And Anmuth's $225 price target on Facebook reflects his belief in 25 percent upside for the stock in the next year.
The analyst is also bullish on online travel agent Priceline, increasing his price target to $2,050, which is 16 percent higher than Friday's close. His old price target was $1,950.
"We continue to think Priceline is the best in class in online travel with strong growth driven by scale benefits, efficient performance & brand spend, and large and growing supply," explained Anmuth. "We also believe Priceline has the potential to re-accelerate in mid-2018 as comps ease and stepped-up investments start to reap benefits."