Sign up for our daily briefing
Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.
Catch up on the day's biggest business stories
Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter
Stay on top of the latest market trends
Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.
Sports news worthy of your time
Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.
Tech news worthy of your time
Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.
Get the inside stories
Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Want a daily digest of the top Denver news?
Get a daily digest of the most important stories affecting your hometown with Axios Denver
Want a daily digest of the top Des Moines news?
Get a daily digest of the most important stories affecting your hometown with Axios Des Moines
Want a daily digest of the top Twin Cities news?
Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities
Want a daily digest of the top Tampa Bay news?
Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay
Want a daily digest of the top Charlotte news?
Get a daily digest of the most important stories affecting your hometown with Axios Charlotte
Sign up for Axios NW Arkansas
Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters
Amazon CEO Jeff Bezos. Photo: Ted S. Warren / AP
Amazon could soon have a $1 trillion valuation, according to Morgan Stanley analyst Brian Nowak, who broke down the calculations in this best-case scenario in a research note to clients this week.
How Amazon could double in value: Investors already prize Amazon highly relative to its typically meager quarterly profits, but Nowak argues that Amazon can increase its retail profit margins from less than 2% today to 5.5% by 2022.
Nowak says Amazon could achieve these margins by investing the healthy profits from its high-margin cloud, advertising, and Prime subscription businesses back into core retail operations, creating efficiencies that increase margins without having to raise prices.
Nowak sees cloud, advertising, and Prime subscription business lines, and not the core retail business for which Amazon is best known, driving Amazon's growth in the near term. His best-case scenario shows these businesses growing at an annual rate of 32% through 2020, and comprising 40% of Amazon's $1 trillion market cap by 2022.
Update: This post originally stated that Amazon could be the first company to a $1 trillion valuation, but Apple is more likely to reach that mark first.