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Valued at a market cap of $2.3 trillion, Amazon (AMZN) is among the largest companies in the world. Amazon is a major player in several key markets, including e-commerce, online streaming, public cloud, and digital advertising.
However, there is another vertical where the tech giant is positioned to gain traction over the next decade. Bank of America analysts believe Amazon’s humanoid robot delivery initiatives could generate billions in cost savings while transforming logistics operations.
The e-commerce giant is developing AI software for robots that would ride in Rivian (RIVN) delivery vans and perform package deliveries, potentially replacing human workers in this capacity.
Amazon has constructed an indoor obstacle course at its San Francisco office, approximately the size of a coffee shop, to train these humanoid robots for real-world delivery scenarios. While Amazon focuses on software development, the company plans to test third-party hardware solutions, with Unitree robots estimated at around $16,000 per unit.
Bank of America projects that robotics in delivery could drive over $7.1 billion in annual savings by 2032, excluding potential benefits from humanoid robots. The firm views this technology as enabling Amazon to achieve profitability in its first-party operations and improve third-party shipping margins, potentially driving long-term retail margins to 11%.
However, challenges remain, including regulatory approval requirements, consumer acceptance issues, and the complexity of operating in uncontrolled environments versus warehouse settings. BofA expects several years of testing before commercial trials begin, similar to the timelines for autonomous vehicle development, but maintains its “Buy” rating on Amazon stock.
Is Amazon Stock a Good Buy Right Now?
In Q1 2025, Amazon reported revenue of $155.7 billion, up 10% year-over-year after excluding foreign exchange impacts. Operating income climbed 20% to $18.4 billion, exceeding guidance expectations, while trailing 12-month free cash flow hit $25.9 billion.
The AWS cloud division continued its strong momentum, generating $29.3 billion in revenue, a 17% year-over-year increase, and now operates at a $117 billion annualized run rate. Amazon’s AI business has reached multibillion-dollar annual revenue with triple-digit growth percentages, though capacity constraints remain a limiting factor for potential expansion.
Amazon’s retail operations demonstrated resilience amid tariff uncertainties, as it implemented strategic inventory management to maintain competitive pricing. The newly redesigned inbound fulfillment network delivered record delivery speeds for Prime members while improving cost efficiency through better inventory placement and higher units per package.
The advertising segment reported revenue of nearly $14 billion, up 19% year over year, driven by expanded full-funnel offerings across Prime Video, live sports, and various entertainment properties. Amazon’s reach extends to over 275 million ad-supported audiences in the U.S. alone.
Management introduced Alexa+, a next-generation AI assistant capable of complex multistep tasks beyond traditional question-answering capabilities. The service launched with over 100,000 initial users and strong early feedback.
Is AMZN Stock Undervalued?
Looking ahead, Amazon expects Q2 revenue to be between $159 billion and $164 billion, and operating income to be between $13 billion and $17.5 billion. The company continues to make aggressive infrastructure investments, particularly in AI capabilities and custom silicon development, positioning itself for sustained long-term growth despite near-term economic uncertainties.
Analysts expect Amazon’s revenue to increase from $638 billion in 2024 to $1 trillion by 2029. During this period, adjusted earnings per share are expected to grow from $5.53 to $12.77. Today, AMZN stock trades at 34.4x forward earnings, below its five-year average of 62x. If the tech stock trades at 30x forward earnings, it will be priced at $383 in early 2029, 76.5% above the current price of $217.
Out of the 53 analysts covering AMZN stock, 45 recommend “Strong Buy,” six recommend “Moderate Buy,” and two recommend “Hold.” The average target price for Amazon stock is $241, indicating an upside potential of over 11% from current levels.
