georgeclerk
Summary
- Project Kuiper is Amazon’s effort to enter the satellite broadband business, which could be a large opportunity, but it’s taking too much of investor attention.
- Investor worries about Kuiper breaking the margin expansion story seem way overblown but reflect the importance of prudent expense management for Amazon investors.
- With a 20% earnings growth trajectory, Amazon’s current valuation is almost absurd, especially relative to peers like Walmart, Costco, and Apple.
- I reiterate a ‘Strong Buy’ rating ahead of earnings, with a price target of $260 per share by the end of 2025.
Amazon (NASDAQ:AMZN) is set to report earnings Thursday, a quarter that will bring it one step closer to becoming the largest company in the world in terms of revenue.
And yet, a relatively small project, codenamed Project Kuiper, has been attracting much of the attention from investors recently.
This supports my long-held argument that the primary driver for Amazon’s future performance, by far, will be its ability to deliver consistent margin expansion.
So, let’s prepare for the upcoming report and answer the Kuiper questions.
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