Global e-commerce giant Amazon.com (AMZN) seeks to leverage cost savings by deploying automation in its warehouses to stimulate its AI (artificial intelligence) spend. Amazon continues to invest heavily in robotics to automate its warehouses and save costs across its vast-spread retail network.
The giant retailer plans to spend up to $25 billion on automating its warehouses, including installing advanced robotics to enhance their efficiencies. This, in turn, will improve Amazon’s delivery times, especially for its Prime members, and help compete efficiently with its Chinese rivals Temu and Shein.
Amazon Bets Big Bucks on AI
Amazon’s CEO Andy Jassy recently announced that the company will spend roughly $100 billion on expanding its AI infrastructure in 2025. Of this amount, one-fourth is expected to be used toward its e-commerce operations. Amazon’s management has focussed on cost cutting initiatives for a few years now, while aiming to expand its data center infrastructure.
Importantly, Amazon’s AWS segment (Amazon Web Service) faces stiff competition from other tech giants such as Microsoft (MSFT) and Google’s parent Alphabet (GOOGL). AWS is also a very profitable business for Amazon, having generated billions in revenue and profits in 2024.
Amazon’s Robotics-Led Warehouse Model Is a Success
Amazon’s robotics-powered warehouse model has already proven effective at its fulfillment center in Shreveport, Louisiana. Amazon has said that the warehouse uses robots in every step of the delivery system, resulting in cost savings of up to 25%. Notably, Morgan Stanley analysts project that such technologically advanced warehouses could generate roughly $10 billion in annual savings for Amazon by the end of 2030.
To date, Amazon has installed over 750,000 mobile drive units at its fulfillment centers. Plus, it has launched Proteus, a self-driving lift vehicle that helps navigate sites. Moreover, Amazon has partnered with chip maker Nvidia (NVDA) to create “digital twins” of its warehouses. This helps in undertaking tons of tests and simulations before actually deploying autonomous robots at a particular site.
While Amazon is trying to automate its warehouses, it is not cutting down on its headcount. In fact, it is hiring a large number of robotics specialists to train its AI models and robots. Amazon’s e-commerce operations employ nearly 75% of its massive 1.5 million global workforce.
Is Amazon Stock a Long-Term Buy?
Wall Street remains highly optimistic about Amazon’s stock trajectory. On TipRanks, AMZN stock commands a Strong Buy consensus rating based on 47 Buys versus one Hold rating. The average Amazon.com price target of $268.91 implies 26.4% upside potential from current levels. In the past year, AMZN stock has gained 21.8%.
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