Amazon.com (NASDAQ:AMZN) is the undisputed king of e-commerce in the U.S., and the company has its digital fingers in a lot of pies that support its flagship business, including logistics, delivery, fulfillment, and shipping. It also invested heavily in a number of areas outside its core business, like electronic devices, streaming video, and streaming music, just to name a few.

The most successful sideline for the online retailer has been Amazon Web Services, its cloud computing operation. AWS has for several years been the company's most profitable segment and continues to grow at a rapid pace. But one analyst thinks Amazon's biggest breadwinner could be worth much, much more.

A man working on a tablet producing a cloud computing image and various graphs.

Image source: Getty Images.

The cash cow

Jefferies & Company analyst Brent Thill again reaffirmed his bullish calls on Amazon, with a price target of $2,300. As part of his analysis, Thill predicts that AWS will generate more than $35 billion in revenue in 2019, more than twice as much as Microsoft's (NASDAQ:MSFT) Azure, the No. 2 cloud computing service. 

A review of Amazon's recent financial results shows that Thill's estimates are ambitious, but they're certainly not outside the realm of possibility. AWS generated $16 billion in net sales for the first six months of 2019, up 39% year over year, and operating income of more than $4.3 billion -- representing the majority of the $6.2 billion that dropped to Amazon's bottom line -- which was up nearly 43% compared to the prior-year period. 

Amazon held a nearly 48% share of the infrastructure-as-a-service (IaaS) market in 2018, compared to Microsoft's 15% market share, according to recent data released by research and advisory company Gartner.

Thill cited other Gartner research that forecasts the cloud computing market will top $315 billion by 2023, up from $135 billion in 2018. As the leader in the space, Amazon is set to capture the largest part of the industry growth. 

"AWS remains the dominant Cloud player, set to capture the majority of forward industry growth as the de facto infrastructure provider," Thill wrote. "We believe AWS would be worth [$300 billion to $400 billion] as a stand-alone company."

The analyst hasn't been bashful about his bullish prognostications for Amazon. Early last year, he predicted that AWS sales would more than triple from the $17.5 billion generated in 2017 to more than $60 billion over the coming five years -- so this latest forecast fits right in with his previous ones.

Funding other growth opportunities

Among the more intriguing things about AWS are the strong operating margins it produces -- they recently hit nearly 23%. The cash this segment generated has helped Amazon expand its e-commerce footprint into new global markets. While those efforts are still ongoing, Amazon's international segment is edging closer to profitability, with operating margins of -2.1% for the first half of 2019, an improvement from -3.8% in the prior-year period.

If Thill is right about the ongoing growth opportunities for AWS -- and there's no reason to think he isn't -- Amazon and its investors stand to benefit from the cloud business far into the future.