Amazon’s (AMZN) Push Into Robotics Could Be a Game-Changer, Says Morgan Stanley

Amazon’s (AMZN) quiet push into robotics could be a game-changer for the retail giant, according to 4.6-star Morgan Stanley analyst Brian Nowak. Nowak told Yahoo Finance that he believes Amazon’s investments in automation could lead to significant cost savings and improved profit margins. Indeed, with fulfillment costs making up around 20% of Amazon’s retail revenue, even a small increase in efficiency could have a major impact.

Interestingly, Nowak has toured one of Amazon’s next-generation fulfillment centers, which feature industrial robots that can automate tasks such as storage, inventory management, and order fulfillment. As a result, he estimates that if 30% to 40% of Amazon’s U.S. units were fulfilled through these robotics-enabled warehouses by 2030, the company could save over $10 billion. This could give Amazon a significant competitive advantage over other retailers, such as Target (TGT).

However, it is worth noting that Amazon’s investments in robotics may already be paying off. In fact, the company’s North America retail operating margins have been improving for five straight quarters. In addition, the company plans to spend $104 billion on long-term assets this year, with a significant portion of that money going toward AI infrastructure and robotics. Despite this increased spending, Nowak believes that Amazon’s stock is still a buy, with a price target of $280.

Is Amazon Stock Expected to Rise?

Overall, Wall Street has a Strong Buy consensus rating on AMZN stock based on 47 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 33% rally in its share price over the past year, the average AMZN price target of $268.91 per share implies 18.1% upside potential.

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