Amazon, Alphabet Poised for $3T Market Caps

Published Date : 07/06/2025 

Despite a slight dip in their stock prices this year, Amazon and Alphabet are poised for significant gains, driven by their dominant positions in e-commerce, cloud computing, and AI. Analysts predict substantial upside potential, making these stocks worth considering for investors. 

Shares of Amazon and Alphabet have experienced a slight decline year to date, despite a 2% return in the benchmark S&P 500. However, certain Wall Street analysts are forecasting substantial gains in these stocks over the next 12 months. Here’s what investors need to know about these tech giants and their future prospects.

Ivan Feinseth at Tigress Financial has set Amazon with a target price of $305 per share, implying a 44% upside from its current share price of $212. This would result in a market value of $3.2 trillion. Meanwhile, Paul Chew at Phillip Securities has set Alphabet with a target price of $250 per share, indicating a 45% upside from its current share price of $172, leading to a market value of $3 trillion.

Amazon: 44% Implied Upside

The investment thesis for Amazon is centered on its strong position in three growing markets. Amazon operates the most popular online marketplace outside of China, driving nearly 41% of retail e-commerce sales in the United States. Additionally, Amazon is the largest retail media company, capturing nearly 77% of domestic-retail ad spending and 40% of global-retail ad spending.

Amazon Web Services (AWS) is the largest public cloud, holding a 29% market share in infrastructure and platform services. With more customers and partners than any other cloud platform, AWS is well-positioned to capitalize on the growing demand for artificial intelligence (AI) infrastructure. The company has invested in developing custom chips for training and inference, further solidifying its leadership in the AI space.

Amazon is also leveraging AI across its retail operations to enhance productivity and efficiency. CEO Andy Jassy has stated that the company is developing around 1,000 generative AI tools to make warehouse robots smarter, improve inventory allocation, and optimize delivery routes. These innovations, combined with the ongoing restructuring of its logistics network, are expected to improve retail margins in the coming years.

However, Amazon may face challenges with tariffs. Morgan Stanley estimates that 60% of sellers on the marketplace have some exposure to China, and Chinese sellers are a significant source of advertising revenue. Despite this, Jassy believes that Amazon's diversified seller base will enable it to weather challenging conditions better than others.

Wall Street expects Amazon's earnings to increase at a 10% annual rate through 2026. While the current valuation of 34 times earnings may seem expensive, analysts have often missed the mark in the past. Amazon has beaten the consensus earnings estimate by an average of 21% in the last six quarters. If this trend continues, the current stock price is quite reasonable.

In summary, while a 44% return in the next year is not guaranteed, patient investors should consider owning a position in Amazon, and now is a reasonable time to buy a few shares.

Alphabet: 45% Implied Upside

The investment thesis for Alphabet is built on large opportunities in digital advertising and cloud services. Alphabet is the largest ad tech company globally, and digital ad spending is forecast to grow at 15% annually through 2030. Although Alphabet has been losing market share, it still has a significant ability to engage internet users through platforms like Chrome, Google Search, and YouTube.

Alphabet is also successfully embracing the AI trend. Generative AI overviews in Google Search are driving higher usage and satisfaction. Additionally, its generative AI application Gemini was the second-most downloaded AI chatbot behind ChatGPT last year, according to Sensor Tower.

Google is the third-largest public cloud, accounting for 12% of infrastructure and platform-services spending in the first quarter, up a percentage point from the previous year. While Amazon and Microsoft lost share, Google is poised to outpace its peers due to its strength in large language models and AI infrastructure, areas where Forrester Research has recognized the company as a leader.

Alphabet also has a third major opportunity in autonomous driving technology. The global autonomous ride-sharing market could reach $2 trillion over the next decade, according to Evercore. Alphabet's Waymo is an early leader, currently providing 250,000 driverless rides per week across four U.S. cities, a fivefold increase from last year.

However, Alphabet faces potential challenges from two antitrust lawsuits that have progressed to the remediation phase. A federal judge will propose fixes for its illegal internet search monopoly in August, and another federal judge will rule on its ad tech monopoly at a future date. While most analysts believe the probability of a forced breakup is low, the odds are not zero.

Wall Street estimates that Alphabet's adjusted earnings will increase at a 7% annual rate through 2026. This makes the current valuation of 19 times sales somewhat expensive. However, Alphabet has beaten the consensus estimate by an average of 14% during the last six quarters. If this trend continues, the current valuation would be reasonable.

In conclusion, Alphabet stock could return 45% in the next year if the judges issue favorable rulings in the antitrust cases. However, the stock could also decline sharply if either judge orders a breakup. Investors can buy a small position today but should wait for more clarity before taking a large stake. 

Frequently Asked Questions (FAQS): 

Q: What is Amazon's target price according to Ivan Feinseth at Tigress Financial?

A: Ivan Feinseth at Tigress Financial has set Amazon's target price at $305 per share, implying a 44% upside from its current share price of $212.

Q: What is Alphabet's target price according to Paul Chew at Phillip Securities?

A: Paul Chew at Phillip Securities has set Alphabet's target price at $250 per share, indicating a 45% upside from its current share price of $172.

Q: What are the three main markets where Amazon has a strong position?

A: Amazon has a strong position in e-commerce, retail media, and cloud computing.

Q: How is Alphabet leveraging AI in its operations?

A: Alphabet is using AI to enhance user engagement through platforms like Google Search and YouTube, and it has developed the generative AI application Gemini, which was the second-most downloaded AI chatbot behind ChatGPT last year.

Q: What is the potential impact of antitrust lawsuits on Alphabet?

A: Alphabet faces potential challenges from two antitrust lawsuits that could result in a forced breakup, although most analysts believe the probability of this is low. The outcome of these cases could significantly affect the stock's performance. 

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