While the rest of the tech world frets over how much money is being poured into artificial intelligence, Barclays is pointing investors toward a completely different reason to own Amazon. According to the global investment bank, the story that matters next will be written in orbit, not in data centers.
Where the stock stands now
Amazon stock (NASDAQ: AMZN) opened Tuesday's trading at $246, but June has kept it firmly on the back foot. In the span of a single month, AMZN has shed more than 7% of its value as tech stocks face intense scrutiny over how aggressively they are spending on AI infrastructure. For the giants of Wall Street, capex has become the single biggest source of worry, largely because those heavy AI investments have yet to translate into returns.
Why Barclays sees it differently
Against that backdrop of anxiety, Barclays handed Amazon stock a 'strong buy' rating. Notably, the note sent to clients steered clear of both AI and capex altogether. Instead, it spotlighted the company's next catalyst, the one Barclays believes can lift AMZN higher, and that catalyst is satellites. The bank described it as the multi-billion-dollar opportunity that Wall Street is missing entirely as it chases AI and compares capital spending.
The 'Leo' network is the real wager
In its note to clients, Barclays argued that Amazon's 'Leo' satellite, a massive low-Earth orbit satellite internet network, could push the stock's prospects higher at a time when other tech giants are running behind AI. Ross Sandler, the analyst at Barclays, drew attention to a major milestone for the company, the potential launch of a commercial satellite as early as mid-third quarter.
A direct fight with Starlink
The bank contends that the moment this satellite goes live, it lands in direct competition with Elon Musk's Starlink. Barclays projects that the space internet business could generate more than $10 billion in annual revenue by 2030. The analyst added that profit margins could climb above 40%, leaving Amazon stock primed for a rally.
200 million Prime users as a head start
Sandler explained that whereas Starlink had to build its customer base from scratch, Amazon can cross-promote its satellite internet packages directly to its existing base of more than 200 million global Prime membership users. Even if the company ends up second in the sector, he noted, it is still an enormous market to tap into. That makes the internet satellite launch incredibly attractive for Amazon, and capable of changing the direction of its stock.
