Amazon Eyes $7 Billion In Savings By 2032 With Robots And AI Powering Delivery and Fulfillment: Analyst

Bank of America Securities analyst Justin Post maintained a Buy rating on Amazon.com Inc AMZN with a price target of $248 on Friday.

Post noted that Amazon is designing an indoor obstacle course for humanoid robots, one of many steps to train them for package delivery.

The initial course is the size of a coffee shop, per the Information report, but the analyst said it would likely increase before testing expands to public roads.

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He said the report indicates that humanoids could eventually ride in the back of Rivian vans before leaping out to deliver packages.

Reportedly, Amazon is developing the AI software and will likely test several third-party hardware solutions. One robot from Unitree has a cost estimate of around $16,000 per unit, which could translate into a significant financial incentive for Amazon to automate, Post noted.

As with autonomous vehicles (AVs), the analyst expects several years of testing before trials begin.

He said obtaining regulatory approval on a local basis could be a challenge and would limit rapid geographic expansion.

Finally, consumer acceptance of robot delivery would likely take time.

Post noted that automating internal processes would be much easier than external ones. He continues to expect a much larger 5-year internal savings opportunity in fulfillment centers and delivery stations than last-mile.

In Post’s recent deep dive on Amazon Robotics, he outlined delivery as a new but significant area for cost savings in the coming years.

In May, the analyst said that Amazon unveiled seven robots to drive efficiencies within its delivery stations. This indicates an increased focus on using robots to drive efficiencies in outbound shipping processes. For last-mile delivery, the company continues to test autonomous drones and targets 500 million packages delivered by drone per year by 2030, he said.

Not including potential savings from humanoids, Post estimated that robotics in delivery could drive over $7.1 billion in annual savings by 2032.

The analyst said artificial intelligence should be an essential driver of robotics, and emerging robot applications can expand Amazon’s AI opportunity beyond AWS to retail.

He noted Amazon’s long-term retail margin opportunity at 11%, assuming that Amazon can operate first-party (1P) at breakeven, improve third-party (3P) margins to 20%, and operate Prime at a slight profit and advertising at 55%.

With its leading robotics infrastructure, Post noted that Amazon could have a better opportunity to move 1P to profitability as a low-cost provider and move 3P shipping margins even higher. As per the analyst, this should drive demand as AI agents increase retail shopping transparency, benefit retailers with lower cost structures, and accelerate delivery.

Price Action: Amazon stock was up 1.96% at $211.98 at last check Friday.

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