Amazon.com's (AMZN) next major wager in the grocery sector could strengthen its dominance in online retail.

The company announced Wednesday that same-day grocery delivery is now available in 1,000 cities, with plans to expand to 2,300 cities by the end of 2025.

"We believe the expansion of fresh perishable grocery same-day delivery will support Amazon.com's continued market share gains in U.S. e-commerce despite intensifying competition," wrote JPMorgan analyst Doug Anmuth in a new report. His team reiterated the stock as a "top pick" and maintained their $265 price target.

JPMorgan noted this expansion targets a massive growth opportunity, as groceries represent 43% of U.S. retail sales, yet only 15% are currently sold online. Amazon.com's latest initiative allows customers to order food alongside other same-day delivery items such as electronics and household essentials.

Amazon.com also provides grocery services through Amazon Fresh and Whole Foods Market. According to JPMorgan data, Amazon.com's grocery business generated over $100 billion in gross merchandise value (GMV) last year, representing approximately 20% of its U.S. marketplace GMV.

Amazon.com shares rose 0.3% in premarket trading Friday.

The move initially sent shockwaves through the industry, with Walmart (WMT), Costco (COST), Kroger (KR), Albertsons (ACI), and BJ's Wholesale Club (BJ) all posting single-digit declines Wednesday. These stocks all gained Thursday morning.

Delivery companies DoorDash (DASH) and Instacart parent Maplebear (CART) fell 4% and 11% respectively, declining again Thursday. Meanwhile, Amazon.com shares have gained 3.5% since the announcement.

JPMorgan stated that Amazon.com's aggressive push into groceries could significantly expand its lead in U.S. e-commerce. This strategy may enhance Prime membership appeal, increase purchase frequency, boost advertising revenue, and force traditional grocers to reconsider pricing and delivery fees.

The firm noted that Amazon.com has been reducing costs by building same-day delivery facilities, positioning inventory closer to customers, and deploying more robotics and automation technology. These efficiency gains, combined with Amazon.com's pricing and scale advantages, may allow the company to grow its grocery business while avoiding the margin headwinds typically associated with fresh food delivery.

More grocery customers also means additional advertising sales opportunities for Amazon.com—a business that grew 22% year-over-year in the second quarter. As more brands compete for visibility on Amazon.com's platform, JPMorgan expects further advertising revenue growth.

In a separate report, Evercore analyst Michael Montani suggested this move could prompt mass-market players like Kroger and Albertsons to modify their delivery strategies, potentially gradually reducing or eliminating delivery fees.

"Membership programs like Kroger Boost and Albertsons FreshPass are playing an increasingly important role in driving customer loyalty and waiving delivery fees. We see this as similar to traditional curbside pickup fees from 3-5 years ago, which were eventually eliminated," Montani noted.

Analysts describe this latest expansion as Amazon.com's most aggressive grocery move to date. Earlier this year, Amazon.com announced a $4 billion investment through 2026 to expand rural delivery coverage to 4,000 rural areas across the United States.