Will Alexa Be a Boon to Amazon (AMZN) Stock Long-Term?


With Shoptalk closing last week, among the most discussed topics was the role of new technology in retail. Not necessarily e-commerce-tech — though e-commerce is rising at a torrid pace and many traditional retailers shutting down or significantly changing their operations. Rather, new tech that are providing solutions for retail companies. In Amazon’s (AMZN) case, the company continues to build new tech products that not only contribute to their e-commerce prowess, but serves as a separate and growing revenue stream.

Amazon has become more than just an e-commerce company — it is slowly become a consumer products maker, too. Deutsche Bank analyst Lloyd Walmsley says, “Amazon discussed the theme of ambient computing where the compute power is available to consumers anywhere anytime via a proliferation of endpoints connected to the cloud, including PCs, tablets, smartphones, smart speakers, smart TVs, smart homes, wearables, as well as automobiles.” The analyst says “the one thread that could potentially link all of them together is voice.”

Walmsley points out that while “more than 100M Alexa devices have been sold to date…Amazon sees the voice interface as merely a pathway to a smart (or AI-enabled) assistant which can redefine the concept of convenience for consumers, especially in retail where consumers are increasing researching and shopping for products anywhere, anytime, and on any device, and want a consistent experience.” So while the company has found success in consumer products, the analyst argues it all points back to its chief revenue-generator — retail.

The key to the game, according to Walmsley, is a consistent seamless experience. The analyst says, “with Amazon Pay – essentially the Amazon ID along with payment and shipping data – increasingly being integrated into Alexa, the Alexa-enabled devices have the potential to offer consumers a consistently seamless experience across devices. While it is still early days for Alexa, the key challenges for Amazon are making the device as natural as possible to interact with.”

Walmsley rates Amazon stock a Buy with a $2,300 price target, which implies nearly 35% upside from current levels. (To watch Walmsley’s track record, click here)

To say Wall Street is optimistic on Amazon would be an understatement. The company continues to grow at a torrid pace, with multiple revenue operations contributing to bottom-line performance and no signs of slowing down. TipRanks analysis of 36 analyst ratings on the stock shows a Strong Buy consensus, with 35 analysts recommending Buy and one saying Hold. There is a $2,118.61 average price target on the stock, representing a 25% upside. (See AMZN price targets and analyst ratings on TipRanks)

 

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