When you think of Amazon.com (NASDAQ:AMZN), the first things that come to mind are likely e-commerce and cloud computing -- and with good reason -- as these segments account for the lion's share of the company's massive business.

The company has been one of the clear winners of the stay-at-home economy that emerged in the face of the COVID-19 pandemic. Adoption of e-commerce accelerated as consumers skipped trips to brick-and-mortar retail stores for fear of contracting the virus and remote work requirements resulted in strong demand for cloud computing services.

While Amazon's two primary businesses will no doubt be the primary drivers of its future success, one analyst is making the case for the stock to climb to between $4,500 and $5,000 over the long term on the strength of the company's media assets, which could be worth $500 billion in the coming years.

Stacks of $100 bills bundled together.

Image source: Getty Images.

A path to a market cap of $2.5 trillion

On Wednesday, Needham analyst Laura Martin initiated coverage of Amazon with a buy rating and a price target of $3,200 -- 22% higher than Tuesday's closing price, which would give the company a market cap of about $1.6 trillion. The picture is even rosier further out.

"We calculate that [Amazon] is worth between $4,500 and $5,000 a share long term," the analysts wrote in a note to clients. This would give the company a market cap of between $2.2 trillion and $2.5 trillion based on Amazon's current share count.

Martin posits that investors are underestimating the value of Amazon's media assets, which includes Prime Video, Prime Music, and Twitch -- the company's video game streaming platform. These "hidden value assets," as she calls them, are worth $500 billion, "nearly as valuable as" Amazon Web Services (AWS), the company's cloud computing operation. 

Many consumers initially subscribe to Amazon Prime to gain access to the company's expedited shipping. Their reasons for sticking around may change over time as the company continues to add additional products and value-added services to its member loyalty program.

Martin justifies the $4,500 long-term call "based on ecosystem value, as adding groceries, video, Twitch, music, etc. to the Prime service keeps subscribers in [Amazon's] ecosystem three extra years and grows [customer lifetime value] by 50%."

Additionally, Amazon stock could get to $5,000 based on its long "track record of [total-addressable-market]-expanding decisions that elongate its growth runway, drive higher profitability, and lower" risk for investors, as the company continues to develop additional revenue streams.

Prime real estate

It's well documented that Prime customers are among the company's most lucrative. Prime shoppers spend $1,400 annually, on average, compared to just $600 per year for non-Prime customers, according to research by Consumer Intelligence Research Partners. This shows that Amazon has a vested interest in getting -- and keeping -- its Prime members.

That's not all. 64% of customers that sign up for a free trial of Prime will become paying members, and they tend to stick around. About 93% of Prime customers continue their membership after one year, and 98% stay on the rolls after two years. 

Amazon employee working in a fulfillment center wearing a facemask.

Image source: Amazon.

History is on its side

The analyst's take makes a lot of sense. When Amazon first introduced AWS, it would have been hard to imagine that it would become the tech giant's fastest growing and most profitable segment, accounting for all of the company's operating profits in the first quarter, and subsidizing the build-out of its international e-commerce business, which is still in the early stages of growth. AWS also provides the juiciest net margins, with more than 30% of the revenue generated dropping to the bottom line.

It would be a mistake to discount the future potential of any of Amazon's businesses given the company's long history of success.