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Investing.com -- Morgan Stanley has named Amazon.com as a new top pick, citing the company’s expansion into the $600 billion fresh grocery market as a significant growth driver.
The bank said in a note that Amazon’s push into perishables could “unlock durably faster growth,” with “every 1% share capture” translating to roughly 120 basis points of upside to U.S. gross merchandise volume (GMV).
In its report, Morgan Stanley modelled 2026 U.S. grocery and consumer packaged goods spend at about $1.6 trillion, with fresh and perishable goods accounting for around $600 billion.
The firm said this category is “roughly the same size as AMZN’s current total estimated ’26 GMV US (~$570bn)” and represents a major opportunity on top of the company’s $50 billion-plus grocery business, which has so far excluded perishables.
The analysts highlighted Amazon’s readiness for the rollout, noting: “We believe AMZN has been preparing its fulfillment and delivery station network to be ready for this 2,300-city fresh/perishables launch, by retrofitting existing fulfillment centers/delivery stations with cold storage capabilities.” Physical stores are also expected to play a role.
On profitability, Morgan Stanley addressed investor concerns over logistics challenges, pointing to safeguards such as a $25 minimum basket size, higher margins on fresh merchandise, and larger basket sizes from “fresh/perishables top-offs.”
The bank wrote: “While fresh/perishables ASPs are lower, we believe the merch margins are toward the higher end of AMZN’s various retail product categories.”
Morgan Stanley concluded that the economics of the grocery push should be manageable, estimating that incremental costs remain within a range that allows Amazon to “generate incremental EBIT on the grocery portion of the order and drive further leverage across the network.”