Alongside fellow big tech names and the rest of the market, Amazon.com, Inc. (NASDAQ:AMZN) stock is off to a red-hot start in 2018. The stock is up 3% in just 2 trading days, and now hovers right around $1,200. This is uncharted territory for AMZN stock. It has yet to consistently trade above $1,200. But that is about to change.

Not only will Amazon stock continue to make new all-time highs, but it will also trend towards $2,000 over the next several years. Here’s why.

The Path to $2,000 for Amazon

As I’ve said before, it’s a little tricky to value AMZN stock. Given its dominance in secular growth markets like digital retail, cloud infrastructure and smart home, as well as its pioneering efforts in big markets like pharmacy, digital advertising, logistics and offline retail, we all pretty much agree that Amazon is due for explosive revenue and earnings growth over the next several years.

But how much growth exactly? If it is just 20% growth on the bottom for the next five-plus years, then the stock is overvalued here. But if it is 50% growth on the bottom for the next five-plus years, then the stock is a must-own for the long-term.

I think AMZN’s earnings growth rate over the next five years will be somewhere around 50% per year, making Amazon stock a must-own here and now.

Retail revenue growth has hovered around 20% to 35% for the past several quarters. The business got a big boost last quarter thanks to the acquisition of Whole Foods Market, Inc. (NASDAQ:WFM).

But growth rates in this segment should trend downward over the next several years as traditional retailers increase their digital footprints and digital retail becomes a more crowded and competitive marketplace (see Wal-Mart Stores Inc (NYSE:WMT)).

Amazon Web Services is growing at a robust 40% clip, but growth rates there have slowed for 9 consecutive quarters. As the cloud marketplace also becomes more crowded and competitive, growth rates at AWS will also continue to slow.

Essentially, then, growth at Amazon’s biggest operating segments (retail and AWS) will slow over the next several years. But Amazon is making a big push into the digital advertisement world, which is a huge space growing at a rapid rate.

AMZN is also flirting with an entry into the pharmacy and logistics markets, while investors shouldn’t count out Amazon Video, which only needs a few big hits to be a formidable rival to Netflix, Inc. (NASDAQ:NFLX).

And maybe Amazon actually does acquire Target Corporation (NYSE:TGT) over the next several years. That acquisition does make sense given Amazon’s desire to have an offline presence among higher-income consumers.

All together, digital advertising ramp plus potential entry into the pharma and logistics markets should offset slowing AWS and retail revenue growth over the next several years. Consequently, I think today’s 30% revenue growth rate is here to stay for the next several years.

Margin expansion from AWS scale and retail business maturation will likely turn that 30% revenue growth into 50% earnings growth.

If earnings do grow at 50% per year over the next five years , that puts earnings five years out at roughly $32.80. At that point in time, AMZN stock doesn’t need that big of a multiple to be a $2,000 stock. The earnings multiple would have to be just over 60.

That seems exceptionally reasonable. Growth will be slower at that point in time, but not that much slower given the company’s long-running tailwinds. My best guess is that revenue growth will slow to 20%, while earnings growth will slow to 30%.

It is easy to see the market giving AMZN stock a 60x multiple in five years for 30% growth. Today, AMZN stock trades at 280x this year’s earnings for 80% growth.

Bottom Line on AMZN Stock

With such robust and strengthening growth prospects, Amazon stock is a must-own for the next several years. This stock will hit $2,000 within the next five years, and maybe sooner.

As of this writing, Luke Lango was long AMZN and TGT.