Amazon.com shares surged on 2 February, pushing its stock market value above US$700 billion and threatening to eclipse Microsoft, a day after the online retailing behemoth reported blockbuster results.
Amazon's stock was up 3.7 per cent at US$1,441 per share in afternoon trade, on track for a record high close and putting its market capitalisation at US$701 billion. The stock traded as high as US$1,498.
Meanwhile, Microsoft fell 2.2 per cent to US$92.97, trimming its market capitalisation to about US$711 billion.
Apple, the world's most valuable listed company, was worth US$827 billion on Friday after reporting disappointing iPhone sales on Thursday. Its stock fell 3.7 per cent to US$161.57.
The major stock indexes fell as much as 2.1 per cent in a broad retreat.
At least 13 brokerages raised their price targets for Amazon after it posted record profits, pointing to growth potential from increasing global Prime subscriptions and a market-leading cloud business.
Analysts at Jefferies, Wedbush and Credit Suisse were the most bullish, boosting their targets to US$1,750. At that price, Amazon would be worth about US$850 billion.
Microsoft's stock has jumped 150 per cent to new highs since CEO Satya Nadella took over in 2014 and made the company a major player in cloud computing while reducing its dependence on a tepid personal computer industry.
But Microsoft has failed to keep up with Amazon shares, which have surged 73 per cent in the past 12 months.
Amazon revenue has been growing at a scorching pace as more shopping moves online and businesses shift their computing operations to the cloud, where Amazon Web Services (AWS) leads the market.
AWS, which competes with Microsoft's Azure and Alphabet’s Google Cloud platform, reported a 45 per cent jump in revenue to US$5.1 billion in the quarter.
"AWS is still adding more incremental dollars than all public cloud competitors combined," Barclays analyst Ross Sandler said.
The high-margin business, which accounts for a significant chunk of Amazon's operating profit, has been providing cash for investments and supporting the razor-thin margins in retail.
Amazon's earlier investments in warehouses have yielded results for the company as lower shipping costs boosted its quarterly operating margin to 3.5 per cent, its highest fourth-quarter margin since 2010, analysts said.
Wall Street analysts are overwhelmingly bullish on Amazon, with 46 of 50 brokerages rating it "buy" or higher, three "hold" and only one "sell." Their median price target is US$1,580.
(Reporting by Supantha Mukherjee in Bangalore and Noel Randewich in San Francisco; Additional reporting Sonam Rai in Bengaluru; Editing by Jeffrey Benkoe)