Amazon.com Inc. (AMZN) may capture nearly 25% of all consumer dollars spent online in the U.S. during this holiday season, according to Youssef Squali, senior analyst for the internet and media sector at SunTrust Robinson Humphrey, as reported by The Wall Street Journal.
As further evidence of Amazon's increasing dominance in retail, the consensus view among analysts is that the company's North American and International segments will record about $53.5 billion in net retail sales during the fourth quarter, 33% better than the same period last year, and more than 60% better than two years ago, per the Journal.
Amazon's stock is up 59% for the year-to-date through Tuesday, putting its market capitalization at $569 billion per Yahoo Finance. Amazon is not just a leader in retail, but also in a rapidly-growing segment of business services, cloud computing.
Largely due to this diversified business model, Amazon may be on track to reach a market cap of $1 trillion by the end of 2018. (For more, see also: Amazon May Soon Become Market's 'Trillion Dollar Bull.')
Soaring Cloud Revenues
Amazon's cloud computing division, called Amazon Web Services (AWS), is projected to record $17.3 billion of revenue in 2017, up 42% from the prior year, per the Journal. AWS is the clear market leader, and one recent study indicates that its share exceeds the combined shares of its next three biggest competitors, Microsoft Corp. (MSFT), International Business Machines Corp. (IBM), and Alphabet Inc. (GOOGL), the parent of Google.
While Microsoft is making strides to close the gap, currently growing its cloud revenues more than twice as fast, AWS is developing more value-added cloud services to keep ahead of the competition. (For more, see also: Microsoft Cloud Sales Show It's Catching Up With Amazon and How Amazon Is Losing The Artificial Intelligence Race.)
Continued robust growth in cloud services is important for Amazon because the profit margins are considerably higher than in retail, the Journal notes. In fact, the analysis performed by Morgan Stanley supporting an eventual $1 trillion market cap for Amazon (see link cited above), values AWS alone at about $270 billion. Today, among U.S. stocks, only Apple Inc. (AAPL), Alphabet, Microsoft, Facebook Inc. (FB), in addition to Amazon itself, have larger market caps than $270 billion, per Nasdaq.
Flying Start for Online Shopping
Meanwhile, online shopping has gotten off to a flying start this holiday season, a scenario that bodes well for Amazon. On Black Friday, consumers in the U.S. spent more than $5 billion online, a new record that was 16.9% better than a year ago, according to Adobe Digital Insights, as reported by CNN Money.
Amazon did not offer figures, but indicated "record levels" of orders, per the same report. Then, on Cyber Monday, Adobe estimated that online sales were about $6.6 billion, nearly 17% better than in 2016, per the Journal.