Amazon (AMZN) stock is one of those investments that’s just too good to ignore. Management has adopted a holistic approach to margin expansion, which has led to consensus forecasts of earnings per share growth rates expanding over the next few years.
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Over the long term, one particular business unit stands out as the primary driver of growth: robotics. Robots, and their applications in society, are poised to become the defining factor that supports Amazon’s margin expansion, bridging Amazon from a revenue-growth company to a profitability-growth company, providing enduring alpha for the foreseeable future. This makes me very Bullish on the stock.
Moreover, on a broader note, robotics is on course to usher in a “tomorrow’s world” that resembles Blade Runner — robots and autonomous machines become the norm, much like televisions did. Over the next decade, robotics is expected to play a pivotal role across all industries, particularly in logistics, manufacturing, and retail.
As human labor struggles to keep pace with rising efficiency demands from consumers, companies are compelled to automate to survive. Amazon, already a global leader in e-commerce and logistics, is investing heavily in robotics to reinforce and extend its market dominance, which likely means this gargantuan e-commerce retailer will generate strong returns for early adopters.
Amazon Is Ahead of the Game with Robotics
While other companies will probably be scrambling for robotics positions in about five to ten years, Amazon is already leading the charge. Management is defining an automation moat beyond AI, down to the hardware level, to reengineer its operations for the new age.
Morgan Stanley (MS) has already predicted that Amazon can achieve $10 billion per year in savings by 2030, with Bank of America (BAC) forecasting even more bullish savings of $16 billion per year by 2032. Such savings will almost certainly lead to strong stock returns. Lower expenses mean higher earnings per share, which is the core metric Wall Street uses to ascertain fair value.
That said, in the immediate future, there are constraints, such as heavy capital expenditures. A typical next-generation robotic fulfillment center costs approximately $450 million; therefore, 10–15 new facilities per year would equate to up to $7 billion in robotics capital expenditures annually. A real-world example of how AMZN is implementing robotics into its e-commerce repertoire is Amazon Scout, a fully electric, “six-wheeled sidewalk delivery robot,” making its debut in 2019.
Meanwhile, Amazon’s fulfillment centers are powered by “tens of thousands” of robots that carry out tasks such as moving products between warehouses, loading items onto pallets, and tracking items as they are sorted and prepared for shipping.
However, robotics equipment has a depreciation period of about 5-8 years, so annual depreciation is likely to rise from the current ~$1 billion. These are rough estimates, but it’s clear that robotics is an expensive endeavor. When coupled with the fact that payback periods are also five to eight years based on conservative savings assumptions, we’re really looking at a cash-flow squeeze for a long-term moat. That said, that’s how the best strategies always are.
Amazon already has approximately 750,000 mobile robots globally, partially automating around 75% of its order volume, and this number is expected to grow over time. Even major players like Walmart (WMT), Alibaba (BABA), and Shopify (SHOP) are well behind Amazon in the robotics department.
The Future Is Bright for Amazon’s Shareholders
At present, Amazon’s stock is trading at a relatively elevated level, sitting well above its 50-week moving average. However, it’s still below its all-time highs, unlike much of the broader market. In that context, Amazon’s valuation appears fairly reasonable. The company’s current price-to-sales ratio stands at 3.55, only modestly above its five-year average of 3.33.
While forward revenue growth is projected at nearly 10%, down from its five-year average of 16%, this is more than offset by an impressive forward earnings per share (EPS) growth rate of 36%, nearly double the five-year average of 19%. According to TipRanks data, AMZN’s growth figures far exceed the sector average, underscoring Amazon’s continued dominance.
This shift in focus—from top-line expansion to bottom-line profitability—reflects a mature strategic phase for a company of Amazon’s scale. It aligns perfectly with the long-term vision Jeff Bezos established: scale aggressively early, then optimize margins as the business matures. Today’s financials show that Amazon’s management is executing that plan effectively.
Given this expanding earnings horizon and the prospect of robotics, I’d be pretty comfortable paying a little bit more than usual for Amazon stock. A fantastic business at a fair price is often far better than a poor business at a good price, as Warren Buffett famously taught.
Looking ahead, I project a 12-month price target of around $260, representing approximately 20% upside from current levels. This estimate is based on $7 in trailing twelve-month normalized EPS and a forward P/E of 37.5, up slightly from the current 35, driven by my expectation of stronger macroeconomic conditions in 2026.
Is Amazon Stock Expected to Rise?
On Wall Street, Amazon has a consensus Strong Buy rating based on 47 Buys, one Hold, and zero Sells. The average AMZN stock price target is $243.32, indicating a precise 11% upside potential over the next 12 months. This is slightly lower than my own $260 target, although the highest estimate on Wall Street is currently $305, so my target is well within reach.
Looking further ahead, Amazon appears exceptionally resilient. Long-term investor returns often depend on whether growth is accelerating or slowing, and in Amazon’s case, the potential for margin expansion through automation presents a rare and compelling opportunity.
Unlike the typical cost-optimization phase that follows full-scale maturity, Amazon’s investments in robotics and AI open the door to meaningful efficiency gains that could drive profits well beyond what traditional scaling would allow. In short, this is a pivotal moment for Amazon, and prospective investors would be wise not to wait on the sidelines.
Amazon is a High-Alpha Stalwart Too Good to Ignore
It’s hard not to feel optimistic about Amazon right now. Backed by a legendary founder and a world-class management team, Amazon exemplifies the kind of leadership that consistently drives top-tier performance. History shows that great companies are built by great management, and Amazon clearly fits that mold.
Ultimately, I believe the 11% expected upside over the next 12 months appears entirely achievable and could be surpassed if macroeconomic conditions improve. In the longer term, robotics stands out as a powerful, underappreciated catalyst for margin expansion. While the market may not yet fully recognize its impact, Amazon clearly does—quietly building a competitive moat that few, if any, will be able to match in the years ahead.