Amazon is back as No. 2 market cap: Next stop $1 trillion?

Amazon is back as the company with the second-largest U.S. market capitalization, and a Macquarie analyst said the e-commerce giant will be the first to reach $1 trillion.

A day after reporting a sharp increase in earnings and revenue, Amazon is worth more than every publicly traded company except Apple. Shares of Amazon rallied 3.6% Friday, pushing the company’s market cap to $763 billion. Microsoft, the current No. 3, is worth $738 billion.

The road to a $1 trillion value must go through Apple, which stands atop the rankings at $824 billion. The iPhone maker’s market value climbed as high as $920 billion in March, and some analysts expect Apple to surpass $1 trillion in the next year. But Amazon will be the first to hit the milestone, according to Macquarie.

The investment bank raised its 12-month price target for Amazon’s stock to $2,100, up from $1,750. That would imply a market value of roughly $1.02 trillion, which would be a 34% increase over Amazon’s current share price of $1,573.

The company “is executing extraordinarily well,” Macquarie analyst Benjamin Schachter wrote in a note to clients. “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 [Amazon] the first trillion-dollar company.”

Schachter said Amazon’s subscription, cloud-computing and advertising businesses are exceeding expectations “markedly,” while retail sales continue to grab market share from competitors.

Prime subscriptions have driven significant revenue for Amazon, while the fast-growing Amazon Web Services unit also contributed to a strong first quarter that beat Wall Street’s expectations. Founder and CEO Jeff Bezos recently revealed for the first time that Prime, which offers unlimited free two-day shipping and video streaming, has 100 million members around the world.

Ticker Security Last Change Change %
AMZN AMAZON.COM INC. 98.71 +0.01 +0.01%

The Seattle-based company said late Thursday that its first-quarter net income more than doubled to $1.6 billion. Revenue surged 43% to $51 billion. The earnings beat sent Amazon shares to all-time intraday highs during Friday trading.

Amazon also announced that it will raise the annual price of Prime subscriptions next month. New U.S. members will pay $119, a 20% increase over the current price of $99.

The primary risk for Amazon is potential “political interference” because its success “is sure to attract more attention from governments around the world,” Schachter wrote.

Amazon has already taken fire from President Donald Trump, who has criticized the company in recent weeks over sales taxes and its impact on the U.S. Postal Service.