Amazon's (NASDAQ:AMZN) stock recently hit an all-time high as the COVID-19 crisis lit a fire under its e-commerce and cloud businesses. Orders on its online marketplace soared as more people stayed at home just as the usage of AWS (Amazon Web Services) spiked with the higher usage of cloud-based services, apps, and streaming media.

Amazon's stock, which has climbed more than 500% over the past five years, was already outperforming the broader market before the pandemic started. But can Amazon keep hitting fresh highs over the next five years? Let's review the tailwinds and headwinds to find out.

An Amazon Go store.

Image source: Amazon.

Amazon's core strengths

Amazon generates most of its revenue from its online marketplaces, but it generates most of its profits from AWS, the world's largest cloud infrastructure platform. The growth of AWS's higher-margin business enables Amazon to expand its marketplace with loss-leading strategies -- including aggressive promotions, cheap hardware devices, and pricey original shows -- to crush smaller retailers.

The expansion of that ecosystem feeds the growth of Amazon Prime, which grew its subscribers by about 50% to 150 million over the past two years. Amazon consistently offers more discounts, delivery services, and digital perks to lock in Prime members and attract new shoppers. Its growing list of Alexa-enabled devices -- including Echo speakers, Fire TV set-top boxes, and connected appliances -- strengthens that grip.

Amazon has also expanded into the brick-and-mortar market by opening cashierless stores and experimental showcase stores, and acquiring Whole Foods Market, which supports its online grocery deliveries. Amazon also recently became the third-largest digital advertising platform in the U.S. after Alphabet's Google and Facebook.

Amazon's expanding media ecosystem, which includes Amazon Music and Amazon Prime Video, also allows it to challenge streaming music leaders like Spotify (NYSE:SPOT) and streaming video giants like Netflix (NASDAQ:NFLX). Unlike Spotify or Netflix, which are both struggling with high content licensing and production costs, Amazon can subsidize its media businesses with its AWS profits.

Amazon's biggest weaknesses

Amazon will likely remain the top e-commerce and cloud company for the foreseeable future, but it still faces competitive threats on both fronts.

An Amazon delivery driver checks an order.

Image source: Amazon.

Walmart (NYSE:WMT) and Target (NYSE:TGT) initially struggled to compete against Amazon, but both superstores aggressively matched Amazon's prices, upgraded their e-commerce platforms, offered free delivery options, and turned their brick-and-mortar stores into fulfillment and pick-up locations for online orders. The COVID-19 crisis is giving Amazon a temporary advantage against Walmart and Target, but both retailers could continue to chip away at Amazon's customer base.

Amazon marketplace is also increasingly dependent on third-party sellers, many of which are based in China and other overseas markets. New regulations from the U.S. Department of Homeland Security could disrupt sales from those merchants, some of which have been accused of peddling low-quality and counterfeit goods.

In the cloud market, AWS faces tough competition from Microsoft's (NASDAQ:MSFT) Azure, which is a popular alternative for retailers that compete against Amazon and companies that are already tethered to Microsoft's other software services.

Between the fourth quarters of 2018 and 2019, Azure's market share rose from 14.9% to 17.6%, according to Canalys. During the same period, AWS's share dipped from 33.4% to 32.4%. In their latest quarters, Azure's revenue surged 62% annually, while AWS' revenue rose 34%. Amazon also lost the Pentagon's coveted JEDI cloud contract, which is worth up to $10 billion over the next 10 years, to Microsoft.

How much higher could Amazon's stock soar?

Analysts currently expect Amazon's revenue and earnings to rise 20% and 22%, respectively, this year. The stock isn't cheap at about 80 times forward earnings, but Amazon could easily beat those estimates as the COVID-19 crisis generates tailwinds for its e-commerce and cloud businesses. Amazon has a market valuation of about $1.2 trillion as of this writing, so it might be unrealistic to expect another multibagger return within the next five years.

However, I believe Amazon's cloud business will keep growing, that it will feed the ongoing growth and expansion of its online marketplaces, and that this virtuous cycle will preserve its moat against Walmart, Target, Microsoft, and other competitors. In other words, Amazon's stock should continue rising and outperforming the market over the long term.