's (AMZN 0.91%) wildly profitable Amazon Web Services (AWS) business, which provides back-end cloud infrastructure and hosting services to broad swaths of the internet, has become increasingly important in recent years as it relates to the e-commerce giant's financial performance. For example, AWS has generated $6.5 billion in operating income over the past year, representing 60% of consolidated operating income over that time frame. Better yet, AWS is only getting more profitable over time as it grows, thanks to operating leverage.

The company is hosting its annual AWS re:Invent conference this week in Las Vegas, and one analyst has put out a stunning new estimate.

Chart showing AWS operating margin

Data source: SEC filings. Chart by author.

AWS could be worth $350 billion in just a few years

Jefferies analyst Brent Thill has released a research note (via Barron's) pointing to bullish signs from customers attending the conference. "Enterprise customers are making bigger commitments earlier with AWS, increasing partner deal sizes," writes Thill. Many of the deals that Amazon is announcing are 3.5 times as large as comparable deals in 2017, according to the note.

Customers are expanding their business with AWS, and the analyst notes examples of some customers that are increasingly relying on AWS for back-end process needs. AWS has already announced four customers going "all-in" on the platform this week, including Korean Air and Ellie Mae, among others.

Illustration of a mobile device being powered by the cloud

Image source: Getty Images.

Given that momentum, Thill is revising his forecast on AWS revenue, which he now expects to reach an incredible $71 billion by 2022. For reference, AWS' trailing-12-month (TTM) revenue is currently $23.3 billion. If you apply a five times sales multiple to that forecast, Thill argues that AWS could be worth a massive $350 billion by then. That's a premium compared to the 3.5 P/S that Amazon shares currently trade at, but easily justified given how much faster AWS is growing compared to the e-commerce business, as well as how profitable it is.

The analyst estimates that AWS will bring in $26 billion in revenue for 2018, compared to the $10 billion in Azure revenue that he is modeling for Microsoft (MSFT 0.10%). Overall, Thill is maintaining a buy rating alongside a $2,300 price target on Amazon shares.

Still the top dog in the cloud

AWS is maintaining its dominance of the cloud infrastructure market. The global market for cloud infrastructure services jumped 46% in the third quarter to $21 billion, with AWS leading the way with 32% market share, according to Canalys. That's nearly twice Microsoft's 17% share and quadruple Alphabet's Google Cloud at 8%.

Chart showing cloud infrastructure market share in the third quarter

Image source: Canalys.

AWS is crushing it, and it's not hard to justify buying Amazon shares just for the exposure to AWS, like I did recently.