"We believe that even without margin expansion in core retail, the other businesses can drive significant profit growth over the coming years and will make AMZN the first trillion dollar company," analyst Benjamin Schachter told clients Friday.
Amazon's margin expansion — up to 37.5% from 22% less than a decade ago — is largely coming from things other than its own retail sales, like third-party sellers and Amazon Web Services, or AWS.
"As its core 1st and 3rd party retail sales continue to take significant share from virtually all competitors, its subscription business, Amazon Web Services, and advertising business are all exceeding expectations markedly," Macquarie said.
Amazon, which spiked more than 7% following blowout earnings, currently has a market cap of $701.55 billion. Apple, by comparison, has a book value of $818.38 billion. Microsoft, also considered a contender for the race to a trillion, has a market cap of $716.57 billion.