Artificial intelligence has been the main catalyst for the “Magnificent Seven” companies this year. Admittedly, that hasn’t done much to help Amazon.com Inc.’s stock — but the company has another growth driver up its sleeve.

Amazon’s e-commerce business is set to benefit massively from its expansion into online grocery delivery, led by its same-day delivery initiative. On Monday, HSBC analyst Paul Rossington lifted his Amazon price target to $260 from $256 and reiterated his buy rating, citing the company’s grocery delivery as a major catalyst.

Amazon has plans to provide same-day grocery delivery services to more than 4,000 smaller cities and towns in the U.S. by the end of 2025, up from just 1,000 in July of this year. It’s a business move that could significantly boost Amazon’s e-commerce market share and drive up sales per Prime member, Rossington said.

The online grocery market is projected to reach $220 billion by the end of 2025 and grow at a rate of 7.5% until 2028, according to Emarketer. By expanding its same-day delivery services, Amazon will be on track to acquire more Prime members, increase its average transaction values and boost the frequency of orders on its platform, according to Rossington.

By combining the scale of Prime, which Rossington said he estimates to have over 130 million members, with same-day grocery delivery offerings, Amazon could meaningfully challenge Walmart Inc.’s grocery footprint.

Currently, Walmart leads the U.S. online grocery market with a 32% market share. Amazon is in second place, with a 23% market share, but Rossington said there is room for Amazon to take the top position.

Rossington estimates that Walmart’s same-day delivery services have membership in the “low 10s of millions,” he said. Amazon has the ability to offset its low-margin grocery delivery business “with higher-margin general merchandise lines, giving it a structural cost advantage over other, dedicated, online grocery platforms,” Rossington wrote.

This same-day grocery initiative is part of the company’s overall investment in enhancing its delivery and fulfillment logistics. Amazon has used automation and robotics to drive warehouse traffic improvements and inventory efficiency. The company has undertaken changes such as holding inventory closer to consumers and last-mile innovations such as automated package sorting. As a result, the speed of same-day customer delivery has increased 30% on a year-over-year basis while costs have come down, according to Rossington.

Amazon’s growing grocery-delivery business also led Morgan Stanley’s Brian Nowak to call Amazon’s stock a “top pick” in a note earlier this month. Nowak estimated the U.S. market for fresh foods and perishables could reach $600 billion next year, noting that every 1% of market share Amazon captures there could add roughly 120 basis points of growth to Morgan Stanley’s 2026 forecast for the company’s U.S. gross merchandise volume.

Amazon’s third-quarter earnings report in late October should provide investors with hints about the future of its e-commerce business. Rossington is optimistic, given Amazon’s “strong track record of beating guidance” and the company’s successful Prime Day in July.