Even though Amazon (AMZN) shares have gained nearly 35% this year, UBS suggests that Prime's endless expansion into new retail niches, a growing advertising business, and the dominant Amazon Web Service cloud service could drive the stock even higher, among other factors.

Amazon rose 1% to $1012 on Monday, as UBS analyst Eric Sheridan raised his target for the online retailer, media group and cloud computing company to $1,200 per share from $1,100. At the analyst's target price Amazon's market cap grows from about $480 billion today to nearly $600 billion. 

Part of the thesis is that Amazon's estimated base of 63 million U.S. Prime subscribers and its other 34 million abroad will buy more and more types of products from Jeff Bezos. "Amazon's acquisition of Whole Foods  (WFM) is one of the most recent examples underlining the company's ambitions to drive greater wallet share among current Prime members especially in categories Amazon has under-indexed," Sheridan wrote.

In a survey of 2,500 U.S. consumers last year, for instance, 75% of respondents said they had never purchased groceries on Amazon, underscoring the opportunity to leverage Whole Foods Market Inc.'s expertise with food. Other large opportunities included household products, with 65% saying they had never purchased the product category from Amazon, and personal care, with 52% not having bought such goods from Amazon.

Advertising is another driver in the UBS model."Generally, we believe that the long-term potential of Amazon's advertising business is still largely overlooked," Sheridan wrote.

Amazon's 350 million active customers, according to UBS estimates, provide a large target advertiser base. Moreover, UBS estimates that more than half of product searches start on Amazon--compared with 28% that begins on Google. Amazon's trove of customer data also gives it an online advertising edge.

The advertising business alone could be worth $26 billion to $29 billion, or five times projected sales, based on comparisons to Alphabet Inc. GOOGL, Facebook Inc. FB, Twitter Inc. (TWTR) , IAC/InterActiveCorp (IACI) , Match.com Inc. (MTCH) and the former Yahoo!, UBS estimates.

Then there is Amazon Web Services, the cloud computing behemoth that UBS estimates is worth $160 billion to $208 billion. Sheridan suggests that AWS will remain "the default choice" and the "go-to public cloud service provider for enterprises" with its core cloud market share growing from the low 30% to mid-30% range in the coming years. 

Amazon's shares rose 0.3% to $1,005 by Monday's close.

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