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Here’s What Could Drive Amazon Stock This Year

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Jan. 8 2019, Updated 10:30 a.m. ET

Amazon stock coverage initiated with a “buy” rating

CNBC has reported that Pivotal Research has initiated coverage of Amazon (AMZN) stock with a “buy” rating and $1,920 price target, which implies a ~20% upside for the stock this year. According to Pivotal, as Amazon’s opportunities are unconstrained, its retail, advertising, and cloud computing businesses could continue to gain. As part of an effort to power its retail business, Amazon plans to open more physical stores, including hi-tech AmazonGo stores in airports, according to Reuters. Also, The Wall Street Journal has reported that Amazon may expand in the digital payment space by rolling out its Amazon Pay service more broadly.

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Amazon’s growing presence in the advertising and cloud markets

Last year, Amazon was the third-largest online advertising provider in the United States, with a 4.1% market share. It overtook Microsoft (MSFT) and Verizon’s (VZ) Oath, according to eMarketer.

In cloud computing, Amazon has maintained a strong lead, holding more than 34% of the global cloud market. In comparison, Microsoft holds ~14%, IBM (IBM) holds 7.0%, and Google holds 6.0% of the market, according to Synergy Research. Amazon’s cloud revenue rose 46% year-over-year to $6.7 billion in last year’s third quarter.

One of the strongest stocks

Amazon stock gained 28% last year, making it one of the strongest gainers among large American Internet companies. Netflix (NFLX) stock gained 40%, and Alphabet (GOOGL) stock was mostly flat. Facebook (FB) and Apple fell 25% and 7.0%, respectively.

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