On Tuesday, Amazon.com, Inc. (NASDAQ:AMZN) unveiled Echo Show, an addition to its market-leading Echo speaker line. The Seattle-based tech giant says the product, which has has the ability to perform video calls from its built-in screen, will cost $230 and will begin shipping on June 28. With that in mind, to what extent can Echo Show propel AMZN stock higher?
With its display capabilities, the Echo Show — powered by Alexa’s artificial-intelligence — allows users to perform a wide range of visual tasks. “Now Alexa can show you things,” Amazon said on its site. “Watch video flash briefings and YouTube, see music lyrics, security cameras, photos, weather forecasts, to-do and shopping lists, and more. All hands-free — just ask.”
AMZN Stock and the Battle for Home Turf
The company’s smart speaker technology, which in 2016 broke all sorts of records in terms of sales, has created a new market that will help Amazon stock grow in the long run. It’s a market where Alphabet, Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) subsidiary Google is racing to catch up with Google Home. Although Google Home arrived after Amazon’s Echo, Google recently announced that its product now offers support for multiple users on its device. Meanwhile, Apple, Inc. (NASDAQ:AAPL) is rumored to be working on a smart speaker system of its own with its Siri artificial intelligence technology.
Bloomberg recently reported that Apple’s Echo-type device has moved beyond the research and development stage and is now being prototype-tested by Apple engineers in their homes. Reports suggests that the device, which will be tied to Apple’s iOS ecosystem, will enable users to play music from Apple Music, read e-mails and send text messages using voice commands.
And to say nothing about Microsoft Corporation (NASDAQ:MSFT), which has just entered the battle by teaming up with Harman International, a subsidiary of Samsung Electronics (OTCMKTS:SSNLF). Can AMZN stock and Amazon, which research firm eMarketer estimates will sell some 25 million Echo devices this year, maintain its lead? Amazon doesn’t break out its sales numbers for Echo, but analysts believe it had sold more than 8 million Echo speakers as of January 2017.
Tuesday’s announcement by AMZN, however, not only demonstrates how serious the company believes the smart speaker market can grow, it also hints of the many ways it can collect data to further dominate retail by pushing into a new area of services — particularly the calling and messaging features. Amazon, which recently open-sourced the Echo hardware to developers, continues to spend tons of money to improve the platform. It has also funded university fellowships for research into use cases for the device.
Bottom Line for Amazon Stock
AMZN stock, which has risen 26% year-to-date, closed Tuesday at $952.82. Although the stock is not cheap at a forward P/E of 142, betting on Amazon remains the smarter play than betting against it. And until CEO Jeff Bezos loses his Midas-like qualities, Amazon stock should reach $1,200 in the next 12 to 18 months, yielding more than 25% returns.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
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