Inc. (AMZN) is killing it in the e-commerce world, but Morgan Stanley thinks it will have similar successes in new businesses over the course of the next five years, which could send the stock as high as $2,000 a share.

In a research report this week, Morgan Stanley analyst Brian Nowak raised his price target on Amazon to $1,250 a share and reiterated his overweight rating, saying businesses such as cloud computing, subscriptions and advertising could get Amazon to a $1 trillion market capitalization and $2,000 stock price as soon as in one year.  At $1,250 a share, Nowak thinks the stock could gain an additional more than 10%. Recently shares were trading at $1,130.11, up $0.94 a share or 0.08%. For the year so far, the stock is 42% higher. At $2,000 a share, Morgan Stanley is predicting Amazon can gain 77%. (See also: Amazon's Australian Launch Is Impending.)

Visions of Growth

According to the analyst, the Seattle-based online retailer’s main business, which includes Whole Foods and the products Amazon sells online, coupled with its third-party merchant sales, which have higher margins, will be worth $600 billion in five years. Meanwhile, its Amazon Web Services cloud business will be worth $270 billion while Amazon Prime, the company’s subscription business will be worth $70 billion and its advertising unit will be valued at $55 billion.

The analysis assumes AWS will see profit growth of 38% per year, compounded annually through 2020. That compares to the 32% growth rate Morgan Stanley is forecasting for its main retail operations in the same time frame. The subscriber unit is expected to have profit growth of 40% while the advertising unit should generate profit growth at a 45% rate, Morgan Stanley said in the note to clients, which was covered by Barron’s. What’s more, the Morgan Stanley analyst said that higher-margin businesses give Amazon more money to invest in its core retail operations, logistics, Prime, its Echo devices, international expansion and to bankroll a move into health care all the while still delivering better-than-expected profits. (See also: Amazon Cuts Third-Party Sellers' Prices Ahead of Holiday Season.)

For the third quarter, the online retailing giant reported results that blew past Wall Street expectations. Revenue came in at $43.7 billion, higher than the $42.14 billion analysts were looking for. Amazon reported EPS of $0.52 a share compared to the $0.03 analysts were looking for. Revenue in AWS was $4.58 billion, also topping the consensus, which stood at revenue of $4.51 billion. Its fourth-quarter revenue target is between $56 billion and $60.5 billion, inline with the $58.9 billion analysts are looking for.


Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.