Amazon Turns to Generative AI to Boost Margins, Cut Costs
Amazon is integrating generative AI into its e-commerce operations, aiming to boost margins and cut costs. Its next quarterly results are due on October 28, with potential concerns about declining operating income. Despite these worries, analysts expect Amazon's shares to grow by 15% next year.
The shift comes as third-party sellers move to Amazon's fulfillment network, and overseas competitors focus less on the U.S. market. Analysts estimate that Amazon's pivot towards next-generation fulfillment centers could save $10 billion annually by 2030.
However, concerns about AWS's future growth and tariffs' impact on Amazon's legacy business have affected investor sentiment. Amazon's shares have been volatile since its July 31 earnings release. The elimination of the 'de minimis loophole' in U.S. tariff law has impacted competitors like PDD Holdings' Temu and Shein, but less so for Amazon due to its large U.S.-based warehouse operations.
Investors are advised to focus on Amazon's long-term picture. Despite short-term concerns, the company's strength in e-commerce and digital advertising, particularly in the North America segment, remains a significant driver of its overall business.
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