BERNSTEIN: Amazon could disappoint in 2018 (AMZN)

Amazon had a stellar 2017. The stock rose 55% during the year, fueled by ever-increasing earnings and the high-profile buyout of Whole Foods.

But such a great year could be setting Amazon up for a less-than-stellar 2018, Bernstein warns.

"In 2017, most retailers felt the pain of Amazon’s dominance, and investors watched as the rest of the retail sector barely squeaked out positive performance. The consensus is that this pattern continues in 2018 and rewards Amazon with another year outperforming retail peers. But could the market be surprised?" the firm wrote in a note highlighting possible 2018 surprises.

“The success certain [electronics and luxury] retailers are having should at some point be more widely recognized. Coupled with the already high level of ownership and lofty valuation, we wouldn’t be surprised to see Amazon underperform these other retailers next year.”

Amazon is one of the most popular stocks for both retail investors and institutional holders alike. Bank of America said this week that the stock is one of the most overowned on Wall Street, with a relative weight of 1.77 and 50.5% of actively managed funds holding shares. It’s also the most popular stock on Stockpile, an app that lets users — most of which are millennials — buy fractional shares of expensive companies.

To be sure, Wall Street consensus is that Amazon still has plenty of room to run. Analysts polled by Bloomberg have an average price target of $1,298 — that’s another 11% above Wednesday afternoon's share price of $1,169. Bernstein declined to disclose its own price target for the Amazon.

"We are by no means implying that these events are likely, and they are certainly not our base case forecast," Bernstein said.

"But we constantly think about these and other surprises in our “what-if” scenarios, knowing that the market tends to throw curve balls. Keeping potential unexpected events in mind helps ensure we are not left staring like a deer in headlights."