, Inc. (AMZN) Stock Is Still the King of E-Commerce, Inc. (NASDAQ:AMZN) has reaped enormous rewards as a prime disruptor of the retail sector. Amazon stock has soared 1,900% over the last decade and given shareholders another 33% in the past 12 months.


But what’s remarkable about the story here isn’t how far Amazon has already come, but how small its footprint in American and global retail actually is. There is a lot of market share left to capture, and AMZN is doing it at an accelerating rate.

Back in the mid-2000’s, AMZN was making $10 billion a year in sales, and most of that revenue came from the company’s original chain-killing book, CD and DVD business. Now we’re looking at a company that can book $120 billion in annual net product sales, with its share of the category expanding to roughly a quarter of every digital retail dollar.

Online retail has exploded over the last decade, and Amazon has led the way. In fact, 45% of all new retail (excluding brick-and-mortar store sales) went straight to the company’s top line.

That’s part of why Wall Street has been happy to bid Amazon stock up from $40 to well above $800. And now that CEO Jeff Bezos has proven he has the discipline to run the enterprise profitably, consensus indicates that AMZN can easily run to $900 — if not $1,000 — per share.

Obviously, AMZN stock caught its breath today, but you can thank a sky-high valuation and big earnings shoes to fill for that. Revenues grew nearly 29%. Amazon Web Services revenues grew by more than 53%, and operating income from that segment doubled. While profits of 52 cents per share were way off estimates for 78 cents, the profit still represents a more than tripling from the year-ago period.

No wonder Amazon stock paused for a moment.

Much More Runaway Ahead for Amazon Stock

What interests me, though, is how much retail is still out there waiting for online innovators to capture. AMZN could keep growing its business simply by turning up the consolidation pressure, buying out online rivals that make an interesting fit and undercutting the rest.

In the meantime, there’s plenty of money to be made simply converting transactions away from traditional grocery, big box and specialty retail stores. It’s reminiscent of the Wal-Mart Stores, Inc. (NYSE:WMT) revolution, which consolidated American consumption from a fragmented mosaic of independent stores into a single national chain.

AMZN takes that model one step further by eliminating the physical store wherever it can. Amazon Prime keeps cutting delivery times too, which is extremely hard for physical stores to compete with.

There is roughly $4.2 trillion a year left in brick-and-mortar sales for Amazon to nibble away at. Even at the rate the company has grown, it’s going to take another decade to conquer that opportunity. Nonetheless, it could potentially hold 10% of all U.S. retail by 2026.

Just about all the new money flowing through the U.S. retail economy is online, which means that Amazon is the pure play on any strength we see from the consumer. Over the last year, retail activity overall has stepped up a respectable $100 billion or 2%. It’s clear that the dynamics currently favor AMZN unless the landscape shifts dramatically.

While the chart may dip and swing depending on how earnings stack up in any given quarter, Amazon stock is a classic example of a long-term buy.

Hilary Kramer is the editor of GameChangersBreakout Stocks Under $10High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.

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