Amazon (NASDAQ:AMZN) is giving consumers many reasons to get a jump on their holiday shopping. And I’m not referring to free, one-day delivery for Amazon Prime members.
At their hardware media event on September 25, the company did a major flex. The tech firm that made its bones in e-commerce showcased new devices that will appear on many holiday wish lists.
However, there’s a bigger story coming out of Seattle. The impressive line of new products clearly shows AMZN is diving into areas that expand product mobility and customer privacy.
AMZN Stock Is More than an E-commerce Play
When looking at Amazon stock, investors frequently point to their dominance in the e-commerce market. And with good reason. Amazon has done an amazing job of not resting on its past successes. The company has continued to expand into other areas.
For example, the tech giant entered the online grocery space with their acquisition of Whole Foods. More recently, the company has launched Amazon Fresh. One of their latest endeavors, PillPack, puts AMZN front and center in the pharmaceutical space.
All of that is well and good. But the Amazon hardware media event was not about Amazon the e-commerce giant. Instead, the company showed how it was expanding Alexa to better compete with Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) artificial intelligence (AI) that is drawing interest from consumers. The sheer scope of the event shows how Amazon is actively working to be integrated into every aspect of their customers’ lives.
Amazon Is Filling Alexa with AI
For starters, Amazon making Alexa available to consumers in a line of wearables like earbuds, eyeglasses and rings. But that’s just the beginning. The company is also putting more natural language AI into Alexa.
For example, Amazon has been using neural networks to give Alexa’s voice a more human sound when it translates text into speech. This is one way that Amazon is trying to keep up with Apple’s (NASDAQ:AAPL) Siri and Google Assistant. Both companies have used similar technology for the same result.
A byproduct of using natural language modeling will be the ability for Alexa to use different voices. Amazon announced it will start using the voice of Samuel L. Jackson as an add-on service later this year.
In addition to overlaying Jackson’s ”voice” to existing Alexa responses, Amazon has also set up a bank of “curated” responses based on well-known Jackson utterances that the assistant can use when the time is right.
Amazon Is Also Putting an Emphasis on Privacy
Amazon has been under the regulatory microscope as customers learned that the company held on to written transcripts of Alexa conversations long after they were deleted. To that end, the company has added a command that lets users hear everything Alexa has recorded.
They also have plans to let consumers delete their voice recordings on a rolling schedule. It is also touting a new privacy tool that will allow parents to restrict who their kids can communicate with via the Amazon Echo Dot Kids Edition.
What Does This Mean for Amazon Stock?
The day after the event, investors seemed largely to shrug off the new product line. Instead, investors seemed to be more concerned about Morgan Stanley’s recent announcement to cut its price target for Amazon stock by over 4%. The analyst for Morgan Stanley, Brian Nowak, also lowered his price target from $2,300 to $2,200.
The reason for the downgrade was an expectation that Amazon’s expansion of one-day shipping will mean lower margins, particularly as Nowak cited lower average order values (AOVs) likely sparked by increased orders for consumables with one-day shipping.
However, unlike when a magician distracts their audience so they can’t see the trick, Amazon is not trying to trick anybody. It’s not hard to see a holiday season with Amazon customers going on Amazon.com to order Amazon products. And that should give the Amazon stock price plenty of room to move higher.
As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.
