Mark Mahaney, senior managing director and head of Internet research at Evercore ISI, joins Catalysts to unravel his bullshit at Amazon (AMZN). Mahaney has a $240 price target on the stock, arguing it could go higher if growth at AWS (Amazon Web Services) continues to accelerate.

He explains that AWS is a “high-margin company” with a “large” total addressable market: “Two years ago they were saying they were losing market share to Microsoft (MSFT). If that narrative changes — and it would change if they continue to see accelerated revenue growth — I think that drives the stock higher.”

Mahaney adds that the stock can also rise if retail sales growth remains consistent at around 10% and retail margins continue to expand. He points out that Amazon is investing in a new satellite communications initiative called Project Kuiper that could rival that of Elon Musk's Starlink.

“Investors will want to know what is happening with core retail margin trends, such as: B. (Example) Kuiper. If they can show that these are going up steadily, consistently and solidly, I think when you put those two or three elements together, the stock goes up,” Mahaney explains. “That’s why it’s one of our top picks.”

Amazon is currently scheduled to report third-quarter earnings on Thursday, October 31st.

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This article was written by Melanie Riehl