Amazon Just Launched More Satellites. Does That Make AMZN Stock a Buy Here?

Yahoo

4 days ago

Satellite internet plays have drawn investor interest as demand for global connectivity grows. While Elon Musk's Starlink has taken the early lead with thousands of satellites already in orbit, Amazon (AMZN) is steadily building momentum with its own Project Kuiper.
On June 23, Amazon launched its second batch of 27 Kuiper satellites aboard a United Launch Alliance Atlas V rocket, bringing its constellation to 54 satellites in low Earth orbit. With plans to deploy over 3,200 satellites and a looming FCC deadline to launch half by mid-2026, Amazon is accelerating efforts to compete head-on with Starlink.
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For investors weighing AMZN stock, this latest milestone underscores both promise and risk. Project Kuiper could unlock new revenue streams over time, but it demands vast capital and execution precision.
Based in Seattle, Amazon is a global e-commerce and cloud computing leader. Beyond core operations, it invests heavily in AI and robotics, powering AWS machine-learning services and warehouse automation. Subsidiaries and startups like Zoox highlight Amazon's aggressive push into autonomous and advanced technologies. Backed by vast R&D resources, the company drives innovation across cloud, logistics, and emerging tech, keeping itself at the forefront of digital transformation.
With a market capitalization of nearly $2.3 trillion, Amazon has seen its shares slide roughly 3% year-to-date.
From a valuation perspective, Amazon trades at 34 times forward earnings and 3.5 times forward sales, higher than the sector medians of 16.6 times and 0.85 times, respectively, indicating that investors are pricing in its superior growth prospects and market dominance.
Amazon is expanding its reach into satellite technology, following the successful launch of more Kuiper satellites, deployed by its own robotic systems, to enhance global connectivity. The company leverages artificial intelligence through AWS to process vast amounts of data from both its warehouses and satellite infrastructure. It also designs custom AI chips to accelerate machine learning tasks across its ecosystem, benefiting both internal operations and external partners.
Moreover, Amazon operates hundreds of thousands of robots, including Sequoia, Hercules, Titan, Vulcan, Sparrow, Robin, Cardinal, and Proteus, to optimize package sorting and movement across fulfillment centers. With Kuiper's satellite internet, Amazon aims to connect remote warehouses and enable drone and robotaxi operations in areas lacking reliable ground networks. This is critical for technologies like Zoox, Amazon's autonomous vehicle unit, which depends on low-latency, real-time data transmission.
By integrating satellite connectivity with AI, robotics, and cloud computing, Amazon is not only reducing operational costs and improving logistics efficiency, but also tapping into new revenue streams in connectivity and edge computing.
On May 1, Amazon reported its Q1 2025 earnings, surpassing expectations on both the top and bottom lines.
Net revenue rose 9% year over year to $155.7 billion, slightly ahead of the $155.04 billion consensus estimate. Growth was led by Amazon's high-margin advertising segment, which surged 18% to $13.92 billion. AWS revenue grew 17% year over year to $29.3 billion, slightly below Street forecasts, but the continued expansion reinforced Amazon's strong footing in the cloud services market.
On the profitability front, net income climbed to $17.13 billion, or $1.59 per share, up from $10.43 billion, or $0.98 per share, in the prior-year period. That marked a 64% year-over-year increase in net profit and a 62% gain in adjusted EPS.
Despite the strong quarter, Amazon issued cautious Q2 guidance. The company projected revenue between $159 billion and $164 billion, reflecting 7% to 11% year-over-year growth. Operating income is expected to range from $13 billion to $17.5 billion, below analysts' consensus of $17.8 billion.
Wall Street analysts remain highly bullish on Amazon, with a consensus rating of 'Strong Buy.' Of the 53 analysts covering the stock, 45 rate it a 'Strong Buy,' six assign a 'Moderate Buy,' and only two recommend holding. Notably, there are no 'Sell' ratings on the stock, which indicates broad confidence in Amazon's long-term prospects.
The average price target stands at $242.87, suggesting more than 13% upside from current levels.
On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com