Amazon stock surged to all-time highs Wednesday, and we have every reason to believe that its run can continue as the e-commerce giant becomes the largest U.S. delivery company. Bank of America on Wednesday projected that Amazon will deliver over 9 billion packages globally this year. Leveraging the buildout and regionalization of its logistics network, the analysts said delivery speeds have “dramatically improved, with nearly 25% of estimated units now delivered same-or-next day.” BofA estimates Amazon delivered 5.9 billion packages domestically in 2023 — more than United Parcel Service and FedEx . Despite “significant improvement” last year, analysts said the efficiency of Amazon’s logistics operations are below 2018 levels for numerous metrics. That gap is part of their argument for “more runway ahead for efficiency gains” and “retail margin leverage upside in 2024.” For those reasons, BofA raised its Amazon price target to $220 per share from $210 and kept its buy rating. BofA called out the importance of Amazon’s retail margin because it has generated more estimated outperformance than its cloud business Amazon Web Services (AWS). Over the past 18 months, Street estimates for retail profit growth for 2025 have grown 219% while AWS profit estimates have dropped by 2%. The analysts estimate that retail will drive 50% of Amazon’s generally accepted accounting principles (GAAP) operating income in 2027 — up from 33% in 2023. Shares of Amazon surged more than 4% on Wednesday — pushing its year-to-date gains to more than 27%. The stock topped a $2 trillion market cap during the session. In April, we raised our Club price target to $200 after Amazon delivered a strong first quarter and what we saw as conservative guidance. On the post-earnings call, CEO Andy Jassy said that Q1 saw the fastest delivery times to Prime customers ever. Amazon is set to report its second quarter next month. AMZN YTD mountain Amazon YTD Management’s focus on further reducing Amazon’s overall cost to serve its e-commerce customers and boosting its logistics efficiencies should be cause for concern among competitors. Jassy said customers look to Amazon for more purchases in categories such as everyday essentials, increasing total spending and purchase frequency. “They’re bringing down the cost of a package, which means they can do more same-day, which means look out CVS [and ] Walgreens ,” Jim said Wednesday. Logistics efficiency has allowed Amazon to carry a high volume of products across different brands and categories that appeal to Prime members. Add on same-day delivery, Jim asked, rhetorically, “Why would you go to the store on the way home when it’s at your home.” He added, “At your door more cheaply, same-day — that has been the holy grail for Amazon. They’re pulling it off.” It’s no surprise, according to Evercore ISI’s annual retail survey, that “faster shipping speeds lead to more frequent buying.” Fifty-one percent of respondents, a survey record,…
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