After reporting earnings on Thursday evening, Amazon.com’s (NASDAQ:AMZN) shares shot up $30 each – a gain of 15 percent that nearly added $14 billion (yes “billion”) to the company’s market cap in a single day of trading.

“The March quarterly results showed just enough upside in both revenues and margins to make the naysayers run for cover,” Stifel Nicolaus analyst Jordan Rohan wrote in a research note (per Businessweek).

All told, Amazon earned $130 million or $0.28 per share in the quarter ended March 31. The bad news? That was down 35 percent over the same quarter in 2011. The good news? Analysts were expecting the company to earn just $0.07 per share.

A big drop in earnings would typically send investors packing, but Amazon’s different. The company’s famously willing to forgo big earnings in exchange for investments that should pan out at some vague time in the future. The Kindle Fire is a great example. Amazon’s actually selling the device below cost out of the hopes that it will earn back that loss in digital media sales. All this has Amazon trading at a rather preposterous P/E ratio of 186.

Knowing that, is Amazon a buy at these high numbers? If so, how high can Amazon’s shares go?

Future growth for Amazon

I see several key areas for future growth at Amazon. The biggest are:

1) A mushrooming digital empire. In a statement from CEO Jeffrey Bezos, Amazon was eager to point out the thousands of ebooks that can only be purchased on the Kindle. “You won’t find them anywhere else,” Bezos wrote. “They include many of our top bestsellers—in fact 16 of our top 100 bestselling titles are exclusive to our store.”

Amazon’s in an all-out war with Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG) and Barnes & Noble (NYSE:BKS) to lead the e-reader (and tablet) market. Taking a cut of digital downloads, after all, is what’s helped Apple generate earnings surprises for years.

Amazon’s trying to duplicate that performance with its App Marketplace and Kindle Fire book, music and video downloads. The company’s on the right track, too, with revenue from Amazon’s “media business” in North America growing 17 percent to $2.2 billion during the most recent quarter.

“One of the big reasons for that growth is because of our digital offerings,” Tom Szkutak, Amazon’s chief financial officer, said in a conference call (per the Post Gazette). “Kindle and the total digital business is growing very strong.”

Even compared with physical goods, digital goods sales are booming. Amazon claims that nine out of its top 10 best-selling products are digital goods, including Kindles, Kindle books, movies, music and apps.

We don’t know the actual number of Kindles that were sold, but Amazon did say sales for the various models of the device were up 43 percent over the same quarter in 2011.

2) The birth of an Amazon phone. We don’t have proof yet, but late last year, Citigroup analysts argued Amazon was working on developing a smartphone that should be ready to launch in time for Christmas in 2012. “Channel checks suggest the Amazon smartphone will have a 4-inch touch panel display, an 8 mega pixel camera, and adopt a Microsoft operating system,” Forbes wrote at the time.

I’d be surprised if the device ran a Microsoft OS, but I definitely wouldn’t be surprised to see some sort of smartphone for sale on the retailer’s Web site this fall. The launch of a competitive smartphone (somewhere between $140-$200) could give Amazon an increasingly-large piece of Apple’s digital pie.

3) Groceries anyone? Amazon’s re-defining the way we shop for everyday things. A number of my friends use Amazon for everything they possibly can – from deodorant to underwear and diapers. To extend this model further, Amazon could expand the grocery delivery program it has in place in Seattle.

Seattle customers can log onto Amazon Fresh and buy everything from probiotics to fresh fish from Pike Place. Shopping for everyday items like milk is almost overwhelming. Do a search for it on Amazon Fresh, and you’ll get more than 150 different results.

Speculation’s been around for more than four years that Amazon would try to roll out it’s grocery delivery service nationwide. If it happens, expect it to radically alter communities where the service is available. And expect it to add to Amazon’s bottom line.

Amazon stock price target

Analysts have a mean price target of $218.69 on Amazon’s stock (per the Orlando Sentinel). Of course, that price target isn’t tied to a date, and I feel like Amazon has a lot higher to climb.

Why? Amazon set on becoming the world’s largest retailer. Period. According to RetailNet Group, Amazon will be the world’s No. 3 retailer by 2016 (they’re currently ranked No. 21). That’ll put it ahead of all the big retailers except for two: Carrefour and Walmart (NYSE:WMT). Could Amazon ever take on Walmart? Yes, but it’s not going to be anytime soon. Walmart’s sales are forecast to hit $444 billion this year, and Amazon’s expected to hit $48 billion.

Growth will be rapid at Amazon.com, though. Sales should hit $140 billion a year by 2016. That’s triple today’s numbers. If that holds true expect Amazon stock price forecasts of $218.69 look incredibly short-sighted.

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