A Morgan Stanley analyst has predicted that an increase in online shopping due to the coronavirus pandemic would see Amazon.com Inc (NASDAQ: AMZN) stocks soar in the next few months. Brian Nowak made the statement on Monday alluding to a possible 14 percent to 25 percent spike in the value of the company’s stock. Amazon stocks now are valued at $2,458.54 (-0.51%). His projections point to expected gains that could see investors gain up to $400 due to increased interest in e-commerce activities.
This is mainly due to the fact that more people are shopping online due to government restrictions on movements due to coronavirus pandemic. Another factor to consider is that there are stimulus checks in the hands of consumers effectively increasing their purchasing power.
Year of Ecommerce Inflection
Nowak maintained that 2020 would be a remarkable year for e-commerce considering that global lockdown affected how people buy things. The fact that less money is spent by consumers dining out and in outdoor commercial activities such as travels implies that more funds would flow towards e-commerce.
“2020 is setting up to be an e-commerce inflection year as a combination of shelter-in-place, lower spend on experience and government stimulus has driven the dollar online,” said Nowak.
He made a forecast a 25 percent growth in e-commerce activities as restrictions are relaxed. He predicted that the trend would move from households stocking up with essentials such as foodstuffs as witnessed in the early days of the pandemic to a variety of other products as economic activities return to normal in the coming months.
Amazon Is Principal Beneficiary Now
All these would be to the benefit of Amazon which has been the greatest beneficiary of online shopping having dominated digital sales for decades. What is obvious is that whatever makes more people shop online favors the company. Nowak’s prediction implies that Amazon stock could be an attractive investment instrument to keep an eye on in the coming months. The $2,800 target envisaged by the analyst may even be a conservative figure if the effect of coronavirus is more intense than expected.
Amazon stocks have had an impressive run since the beginning of 2020, gaining 33.2 percent as investors buy up the stocks as consumers made more purchases online. According to a Motley Fool report, a huge part of the e-commerce giant’s profits came from its Amazon Web Services, its cloud computing business which contributed 77 percent of its overall income in Q1. Last year, AWS contributed 50 percent to the e-commerce company’s profit. This is likely due to increased demand in cloud computing services due to the coronavirus lockdown.
According to a Gartner report, the AWS dominates the global cloud market with its 48 percent share. Microsoft Corporation (NASDAQ: MSFT) with its 16 percent comes second as seen from a July 2019 study.