The Road To $1 Trillion: Amazon Can Beat Apple

Which company will hit a $1 trillion valuation first, Amazon.com, Inc. AMZN (current valuation $430 billion) or Apple Inc. AAPL (current valuation $756 billion)?

According to Piper Jaffray's Michael Olson, Amazon will be first to hit the coveted milestone even though Apple has a notable head start.

Speaking as a guest on CNBC's "Squawk Box" segment on Friday, Olson argued that the company to win the race to $1 trillion will be the one that has the most "shots on goal to having a new leg of innovation" within the business. That's Amazon given its potential expansion into same day and same hour delivery services, AWS and a shift to advertising on its platform.

On the other hand, the analyst sees Apple as being a "product cycle company" with a "less defined" path toward innovation. As such, Olson believes Apple will grow at a slower rate versus Amazon since roughly 80 percent of its business is tied to the iPhone and related services revenue.

When Will Amazon Hit The Trillion-Dollar Mark?

Investors hoping for Amazon's stock to more than double in the near term should adjust their expectations and may need to wait at least five years.

Olson acknowledged that his valuation metrics don't extend five years, but the path to Amazon hitting a $1-trillion valuation is still simple: Apply a multiple that most investors are using on Amazon today, and apply it an EBITDA that is six years out.

Related Links:

Chamath Palihapitiya Defends His $1 Trillion Amazon Valuation

Analyst: Expect A Retail Bloodbath This Year, And Amazon Not Immune