Online retail giant Amazon (AMZN) is steadily transforming its Stores and Logistics operations from labor-heavy workflows to autonomous systems powered by robots, drones, and intelligent software. This shift is fundamentally reshaping Amazon’s operating model and driving long-term financial gains, mainly through margin expansion. Amazon’s stock has risen ~137% over the past three years, outperforming the broader S&P 500 (SPX), yet again reflecting how Amazon has successfully transitioned from a pure e-commerce company to a diversified technology and logistics powerhouse.
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I remain confidently Bullish on Amazon’s stock, given these advancements, and believe regulatory resistance will be milder than many expect.
Autonomous-Assisted Labor Increases Margin Growth
Many worry about the loss of human labor, but in reality, it’s the growth of human labor that may plateau — not its relevance. The current workforce is increasingly supported by safer, more efficient, and higher-quality workflows. For now, skilled human oversight remains an essential component of most AI-enabled machinery operations.
In other words, human labor isn’t being eliminated but redirected — from manual tasks to higher-order, more technical roles. Out of Amazon’s 1.5 million employees, only about 14,000 positions were affected in the most recent round of workforce optimization, underscoring how limited the displacement has been given the company’s overall scale.
In Fiscal 2024, Amazon’s shipping costs totaled $95.8 billion, up from $89.5 billion in 2023. Management attributes much of this increase to stronger sales, while noting that fulfillment network efficiencies helped offset higher volumes. Lower transportation costs, driven by automation and smarter network design, have played a key role. The strategy’s core is simple: delivery speed continues to rise, while unit costs are progressively reduced through technology and process optimization.
Amazon has now deployed its one-millionth operations robot and introduced DeepFleet, a generative foundation model trained on “millions of hours” of data to improve mobile-robot travel efficiency by roughly 10%. This creates a powerful competitive moat — a self-reinforcing advantage built on unmatched operational scale and learned system performance.
Autonomous Drones & Software Are Set to Revolutionize
In other positive news for AMZN stock, the company’s Prime Air initiative is now fully integrated into its logistics network, with MK30 drones operating from Same-Day Delivery sites. The program is already active in the U.S. and expanding internationally. According to AMZN, the MK30 model flies twice as far as its predecessor, operates more quietly, and enables lower-emission, faster small-package deliveries compared to traditional truck transport under many conditions.
As these capabilities scale, Amazon is unlocking a powerful time–margin efficiency flywheel, enabling deliveries to arrive the same day—or even within hours. This innovation further strengthens Amazon’s competitive moat and reinforces its long-term dominance in the digital retail supply chain.
Amazon’s autonomy strategy extends well beyond vehicles and hardware. The company is also empowering enterprises with tools to deploy AI agents securely at scale, managing runtime, memory, identity, and gateway operations. This approach is clearly gaining traction: remaining performance obligations—primarily multi-year AWS backlog commitments—now total approximately $177 billion with an average contract life of 4.1 years. This depth of visibility and stability underscores the durability of Amazon’s business model and provides yet another reason to remain bullish on the stock.
Amazon Has Even More to Give
Amazon is even expanding autonomy outside of the company’s four walls. “Supply Chain by Amazon” turns Amazon’s logistics autonomy into a managed service for sellers, showing ~20% higher sales conversion for adopters. This shows that autonomy is also translating into revenues and not just acting as a margin driver.
Zoox, while not core to Amazon’s current earnings, is the clearest full expression of full physical autonomy under the Amazon umbrella. The service has already launched public rides in Las Vegas, and there’s about 10,000-unit/year production capacity at the Hayward facility (at full run-rate).
Financially, the valuation looks suitable for investment. AMZN’s forward PEG non-GAAP ratio is 1.83, which is 5.45% higher than the sector median. This indicates a relatively fair valuation considering the company’s future growth prospects. As normalized EPS is expected to grow by about 20% per annum over the next few years, I think we can expect a similar annual price return from the stock (given the valuation is fair).
Is Amazon a Buy, Sell, or Hold?
On Wall Street, Amazon has a unanimous Strong Buy rating based on 41 Buys, zero Holds, and zero Sells. The average AMZN price target of $269.24 indicates a 16% upside potential over the next 12 months.
There would need to be considerably more upward revisions from analysts for the current valuation to be seen, in retrospect, as cheap. This is not unlikely, given the massive scale and pace of AI development, but the market is undoubtedly well aware of AI’s importance, so there is no significant undervaluation here.
Amazon Stays Poised for Durable Alpha
I remain confidently bullish on Amazon stock, as the company is building its autonomy-driven moat precisely when economies of scale are set to define the next phase of competitive growth. With a reasonable valuation reflected in its forward PEG ratio and an elite technology-focused management team, Amazon is well positioned to deliver at least moderate alpha—and, in a bullish scenario, substantially outperform the market over the next five years.