Citi Research believes Amazon should split itself up to reduce the risk of regulation and increase shareholder value.

The firm reiterated its buy rating for Amazon shares, saying the technology giant is its "top pick" in the internet industry.

"There has been greater noise of late regarding the desire to investigate and potentially regulate the company," analyst Mark May said in a note to clients Monday. "By separating the retail and AWS businesses, Amazon could minimize or avoid the risk of increased regulatory pressure."

Amazon shares declined 3.2 percent Monday.

The analyst noted reports that President Donald Trump is obsessed with Amazon, whose founder, Jeff Bezos, owns The Washington Post, and that his administration could potentially go after the company on antitrust grounds. May added the internet giant is getting more scrutiny due to its roughly $1 trillion market valuation and Bezos' status as the richest person in the world.

After a separation, May said, Amazon's retail business will be worth materially less than its cloud computing company. He estimates a roughly $400 billion enterprise value for the company's retail segment versus $600 billion for Amazon Web Services.

"A smaller market cap Amazon retail business may bring (slightly) less attention to its market size and dominance," he said.

May reaffirmed his $2,250 price target for Amazon shares, representing 14 percent upside to Friday's close.

Here are the seven other reasons May believes Amazon should separate its retail and Amazon Web Services businesses:

1. "To better align stock-based compensation/incentives."

2. "To plan for Bezos' succession and to promote and retain key executives."

3. "To take advantage of the HQ2 planning."

4. "To avoid/minimize conflicts of interest."

5. "To improve shareholder selection."

6. "To achieve a better valuation as a pure play."

7. "To provide a more attractive M&A currency for potential acquisitions."

Amazon shares are significantly outperforming the market this year. Its shares are up 68.5 percent year to date through Friday versus the S&P 500's 8.7 percent gain.

The company declined to comment on the Citi report.

In March, former Walmart U.S. CEO Bill Simon also said Congress should look into splitting up Amazon.