Bad news is a rarity for Amazon.com, Inc. (NASDAQ:AMZN) of late. Amazon is seemingly taking over the world unchecked, and enthusiasm over the company’s retail dominance has pushed AMZN stock more than 35% higher year-to-date, and some 1,260% higher over the past decade.
But Deutsche Bank delivered one of those uncommon snippets of unpleasant news to Amazon shareholders today.
Specifically, analyst Lloyd Walmsley cut his price target on AMZN stock and offered a little bit of caution. Walmsley, who had a previous PT of $1,150 per share, now sees Amazon reaching $1,135, citing weak cloud checks as a near-term risk to investor sentiment.
Knock me over with a feather.
This is what qualifies as bad news for Amazon anymore — a roughly 1% price-target hike by an analyst who still has a “Buy” rating and still sees nearly 12% upside in shares. That’s likely why Amazon stock, which traded slightly lower in Tuesday’s premarket action, is now up another percent as of this writing.
Amazon’s investor base appears unshakable, even at these elevated levels. They are dedicated to this long-term growth story of Amazon, where it becomes an all-in-one retail behemoth.
Right now, it’s hard to argue.
Amazon Is Getting Better at Selling Amazon
Amazon’s takeover of the retail space has been in the spotlight for the past few months. While AMZN will never be allowed to control all aspects of retail, there’s still an enormous amount of pie left to eat before antitrust commissions and anticompetition matters really become an issue.
Amazon is transforming into a retail destination not just for cheap brands, but for all brands as well. Premium brands like Nike Inc (NYSE:NKE) are starting to directly sell on the platform, and that’s a sign of the times. Think about it. Amazon’s reach is now so great that even major brands like Nike feel like they need Amazon as a distribution channel to remain competitive.
And for Amazon, that signals penetration potential into the market of higher-end shoppers.
On the mainstream front, Prime Day was huge. Sales were up 60% year-over-year and broke numerous records. Prime Day beat Black Friday and Cyber Monday to be Amazon’s biggest sales day ever. Perhaps most importantly, the growth was really driven by Amazon’s own items, with the Alexa-enabled Echo Dot coming in as the most popular item sold.
That’s doubly good for Amazon, because as it sells more and more of its own things, that’s less it has to pay out to third-party product providers, not to mention that the Echo family of smart speakers are ultimately designed to spur more buying from Amazon.
On the topic of Echo, the smart home is a rapidly growing segment right now, and Amazon is doing all the right things to capitalize on this big growth opportunity. AMZN dominates the home speaker market. Recent data from Slice Intelligence shows that Amazon has the two most popular home-speakers by market share (Amazon Echo at 21.6% market share and Dot at 18.2%).
Alphabet Inc (NASDAQ:GOOG) is still struggling in the market with 3.2% market share, while Apple Inc. (NASDAQ:AAPL) has yet to even enter the market.
Amazon’s dominance of this hyper-growth market should continue. Amazon recently rolled out a service geared at helping consumers set up their smart homes — a service that will only deepen Amazon’s reach and boost overall brand awareness.
More Bull Case for AMZN Stock
Amazon also is making a serious push into the grocery market with its acquisition of Whole Foods Market, Inc. (NASDAQ:WFM). It will be interesting to see how much market share WFM can gain, especially among Amazon Prime members (which is estimated at some 85 million now).
And remember, this isn’t necessarily about growing the high-priced (thus, exclusive) Whole Foods brand. This is believed to be a play to expand AmazonFresh grocery delivery, which can deliver a much more serious blow to grocery competitors. That’s why stocks like Kroger Co (NYSE:KR) sold off hard following the Whole Foods announcement.
Even rumblings of Amazon entering a market is enough to make competitors quiver. Amazon merely applied for a trademark for its own meal-kit service, according to reports, and Blue Apron Holdings Inc (NYSE:APRN) was clubbed in response.
And the cloud growth story, despite a lot of near-term noise, is still in its early innings. Amazon Web Services has been a bottom-line boon for AMZN, and that’s in the midst of the market opportunity, with no real signs of heavy saturation.
All in all, Amazon is growing in all the right places, and the world domination theory is far from far-fetched.
Buy AMZN stock and hold it. No other company looks as poised to dominate the world as Amazon.
As of this writing, Luke Lango was long AMZN.
