Bank of America has reaffirmed its Buy rating on Amazon.com (AMZN) with a $310 price target, highlighting the company's Leo satellite network as a new growth driver that is approaching its first revenue milestone. The bank believes this initiative could provide investors with a fresh perspective on Amazon beyond its traditional retail, advertising, and cloud computing segments.
Analyst Justin Post noted that Amazon has accelerated its launch cadence, completing three launches in the second quarter alone and deploying over 300 satellites by mid-May. The company's latest launch on May 29, using a United Launch Alliance Atlas V rocket, added 29 more satellites to the constellation, bringing the total to 331 across 12 missions.
Leo operates a low Earth orbit satellite network, with satellites positioned closer to Earth than legacy geostationary systems. This proximity, according to Amazon, reduces internet signal latency. Originally known as Project Kuiper, the network has been rebranded to Leo and aims to serve homes, businesses, and government users lacking access to fixed-line or wireless internet.
Bank of America projects that commercial service could commence in the third quarter as the launch pace increases, as reported by TipRanks. The bank estimates Amazon's total spending on the initial constellation version at approximately $25 billion through 2028, excluding consumer equipment. By 2032, Bank of America sees potential consumer broadband revenue reaching around $14 billion if Amazon captures a 25% market share.
Amazon's satellite push complements its ongoing efforts to improve logistics profitability. Post highlighted that automated fulfillment centers, mega-sortation hubs, and flexible delivery stations have contributed to a roughly 25% reduction in shipping costs per unit since 2021. However, he kept his $310 target unchanged, citing higher labor and fuel costs that continue to limit near-term savings.
The company's recent financial results support this outlook. First-quarter AWS sales rose 28% to $37.6 billion, while operating income increased to $23.9 billion from $18.4 billion a year earlier. Both North America retail and international segments also reported higher operating income.
Amazon shares closed Monday down 3.47% at $261.26, with further declines in after-hours trading and before Tuesday's open, according to MarketBeat. Among 60 analysts tracked, 57 rate the stock as Buy, three as Hold, and the average price target stands at $312.52.
Competition is intensifying in the satellite internet space. SpaceX's Starlink is making rapid inroads in aviation internet, with American Airlines planning to install Starlink on over 500 narrow-body jets starting in the first quarter of 2027. Amazon has secured a partnership with Delta Air Lines to provide Leo service across 500 planes beginning in 2028.
Amazon is also expanding Leo beyond home internet. In April, the company announced plans to acquire Globalstar, with Amazon Leo supplying satellite services to certain iPhone and Apple Watch devices, including Emergency SOS via satellite. The deal, pending regulatory approvals and other conditions, is expected to close in 2027.
Delta CEO Ed Bastian described the airline's partnership as "the best, fastest and most cost-effective technology available," while Amazon CEO Andy Jassy emphasized Leo's speed and reliability for "businesses, governments, and consumers." The aviation antenna is designed to support download speeds of up to 1 gigabit per second, according to Amazon.
Despite the optimism, Bank of America cautioned about risks including stiffer local retail competition, potential cloud market share losses to AI-focused rivals, and the need for greater AWS capital expenditure. The bank also noted stock volatility during economic uncertainty and highlighted that the satellite rollout depends on launch timing, regulatory approvals, and customer adoption of a service that is not yet at scale.
