The Seattle-based company’s expansion into so-called logistics services — shipping and distribution — could eventually be worth more than $100 billion in revenue, according to Truist Securities analyst Youssef Squali.

“By turning its logistics network into a service offering for off-Amazon merchants, we believe the company is turning a major cost center into a profit center,” Squali, a long-time Amazon bull who has had a buy rating on the stock since initiating coverage in 2017, wrote in a research note Wednesday.

Amazon shares have risen 58% this year as a shift to cost-cutting has boosted profits, after Covid-19 lockdowns spurred a spending binge on things like warehouses to keep up with soaring orders. The additional sales would help boost Amazon’s revenue growth, which sank to 9% last year, its slowest-ever expansion. It’s projected to rise 11% to $570 billion in 2023, according to the average of analyst estimates compiled by Bloomberg.

Supply Chain by Amazon is the latest part of its drive to become a leading logistics company, overseeing the flow of products from factories to customers’ doorsteps globally. The company aims to replace a variety of businesses handling tasks like ocean freight, customs, ground transport and inventory storage, with one seamless service.

Analysts see the strategy echoing what the firm achieved with its cloud business, when it built Amazon Web Services to serve its own needs before opening the platform to third-party merchants.

“Amazon has the two main pillars: AWS, and retail” and there’s always been talk of them having another pillar, Thomas Martin, senior portfolio manager at Globalt Investments, said in an interview. There’s “every reason to believe that Amazon will pursue that, and that they will ultimately be successful.”

Amazon’s valuation has dropped since last year, but at 34 times profits projected over the next 12 months, it’s still one of the most expensive of the biggest technology and internet companies.

That’s hardly a deterrence for Wall Street, where all but two of the 63 analysts tracked by Bloomberg covering the company have buy ratings. The average price target implies a gain of 31% over the next year. The stock rose 0.8% Thursday.

“Amazon is basically a stock that is loved, not really based on today’s earnings, but more so what they’re gonna do in 2024 and 2025,” said Globalt’s Martin.

When it comes to its supply chain ambitions, “the revenues might take time to ramp up to get to the point where they’re really going to be making money,” he said.

— With assistance by Spencer Soper and David Watkins