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Evercore ISI senior managing director and head of internet research Mark Mahaney joins Catalysts to break down his bull call on Amazon (AMZN). Mahaney has a $240 price target on the stock, and argues that it could go higher if growth in AWS (Amazon Web Services) continues to accelerate. 

He explains that AWS is a "high-margin business" with a "large" total addressable market: "Two years ago, the narrative was they were losing share to Microsoft (MSFT). If that narrative changes — and it would change if they continue to show accelerating revenue growth — I think that takes the stock higher."

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

"Investors are going to want to know what's happening to the core retail margin trends, ex. [example] Kuiper. If they can show those to be steadily, consistently, solidly rising, I think if you put those two or three elements together, the stock goes higher," Mahaney explains. "That's why it's one of our top picks."

Amazon is currently scheduled to report thir quarter earnings on Thursday, October 31.

To watch more expert insights and analysis on the latest market action, check out more Catalysts here.

This post was written by Melanie Riehl