Here's why Amazon could beat Apple at $ 2 billion

Now that Amazon has joined Apple in the billion-dollar market value club on Tuesday, the race is running to see which company can cross $ 2 billion.

At least one analyst predicts that Amazon will eventually beat Apple to the mark.

D.A. Tom Forte of Davidson said in an email on Tuesday that Amazon (AMZN) can get the upper hand on Apple (AAPL)because it has more room to grow.

The company has reached its current valuation partly because its cloud computing unit, Amazon Web Services, is in full swing.

Forte wrote that it "has been a boon for the profitability of the company and, ultimately, for its share price". He added that if Amazon was "an e-commerce company that was losing money, we would not be here today."

The strength of its web services business has allowed Amazon to continue to grow in other non-core areas. Last year, he bought Whole Foods and recently bought the Pillpack online pharmacy. According to rumors, Amazon may want to go even further in the media sector and buy the Landmark movie channel.

And Forte thinks there are two other areas of retail that could also help the company led by Jeff Bezos to achieve a market capitalization of $ 2 trillion: gas stations and travel.

After Costco and Priceline?

Strong argued in a recent report that Amazon could emulate the model of Costco (COST), which owns and operates service stations in some of its giant warehouses.

He added that the company could offer fuel discounts to attract drivers who are also Amazon Prime subscribers.

But we do not know how Amazon could enter the service station sector. Many of its Amazon brand stores are smaller, urban stores that are not amenable to a service station.

Another possibility could be the opening of service stations in suburban areas of Whole Foods.

In terms of travel, Amazon has in fact already tried to get into this business. But his site Amazon Destinations has only lasted a few months in 2015 before being closed.

Strong thinks that Amazon could retry and offer services ranging from discounts on cruises and rental cars to airline tickets and hotel bookings. He also said that Amazon could also compete with Airbnb, the home-sharing site.

It's not the only one on Wall Street to think that Amazon could make another run in the travel industry. Morgan Stanley released a report in March suggesting that Amazon could take on Priceline's owners Booking Management (BKNG) and his rival Expedia (EXPE).

Strong said that Amazon's booming gaming sector, led by the Twitch video site, could also give Amazon a boost.

In fact, Forte cited the opportunity of eSports as a reason why he raised his short-term price target for Wednesday to $ 2450 per share. That's about 25% more than the current stock price and would value Amazon at about $ 1.2 trillion.

Shooting on all cylinders

But Amazon should more than double to $ 2 trillion, which is not an exaggeration

The stock has been doing just that in the last 12 months, and it has climbed nearly 600% in just five years.

If Amazon continues to show impressive earnings growth over the next few years, then $ 2 trillion might not seem out of the question.

That's why a growth-oriented fund manager prefers Amazon to Apple.

"Amazon continues to shoot all the cylinders," said Matt Benkendorf, investment director of Vontobel Quality Growth. "It's unequivocal a franchise that gets stronger as it grows."

Benkendorf added that Amazon's large investments in Amazon Web Services and its retail operations are starting to generate significant profits. Regarding why he owns Amazon, but not Apple, Benkendorf said "there are questions about the sustainability of Apple's growth".

Wall Street is in agreement.

Amazon's profits are expected to grow at a much faster pace than Apple's.

Analysts predict an average annual earnings growth of 46 percent for Amazon over the next five years, compared to an estimated annual growth of just 13 percent for Apple.

CNNMoney (New York) First published on September 5, 2018: 2:49 PM ET