Amazon’s annual Prime Day sales event will launch next week, taking place over July 16 and 17 and offering big deals on various brands. This year will be the first Prime Day to star Rufus, Amazon’s AI chatbot.
Visible Alpha telecom sector analyst Melissa Otto joins Market Domination Overtime to give insight into Amazon’s Prime Day promotions and what investors and consumers should expect from this year’s shopping day. Otto explains why Amazon’s North American business gives reason for that hope, as well as the consumer tailwinds Prime Day sales could give for tech brands like Apple (AAPL).
“I think the North American retail business, it’s never really been a very profitable business for Amazon. However, that started to change at the end of last year and coming into this year. Based on S&P Global Visible Alpha consensus, we’re expecting 6.3% operating profit margin,” Ottoman tells Yahoo Finance. “And for that to jump to almost 10% over the next three years. And you know, revenues just aren’t staying still either. Revenues are expected, by the end of 2027, to hit $500 billion. So that would mean that Amazon is generating about 10% top-line growth in their North America retail business year on year.”
For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.
This post was written by Nicholas Jacobino
Video Transcript
One of the biggest online shopping days of the year is almost here.
Amazon’s annual prime day is set for July 16th and 17th.
Mark your calendars joining us now is Melissa Otto TMT, analyst for S and P Global Visible Alpha.
Uh Melissa, it is good to see you.
So prime day it’s here getting ready to fill those carts.
Melissa, what are your expectations uh for this year?
What kind of growth are you expecting that?
How is this prime day?
How is it different, Melissa, if at all?
Thank you.
I’m excited to use Rufus the new chatbot to help me with my shopping list.
How about you?
Um in terms of expectations, you know, I think the North America retail business, it’s never really been a very profitable business for Amazon.
However, that started to change at the end of last year and coming into this year, uh based on S and P global visible out a consensus, we’re expecting 6.3% operating profit margin and for that to jump to almost 10% over the next three years.
And you know, revenues just aren’t staying still either.
Revenues are expected by the end of 2027 to hit $500 billion.
So that would mean that Amazon is generating about 10% top line growth in their North America retail business year on year.
So I think expectations are pretty robust for that business.
I I in answer to your question about Rufus Melissa, since you asked, I don’t know if Rufus fixes the problem that I have with Amazon and I’m a big Amazon prime customer to be clear, which is there is just so much for lack of a better word crap on Amazon.
There’s so much stuff you’re drowning in it.
You don’t know what to buy.
It’s not curated at all.
That is what has always drive me, driven me nuts about Amazon.
I don’t know if Rufus fixes that problem.
You tell me what you think and what you think, maybe how they’re gonna leverage it.
I think Rufus tries to get us one step closer to solving that problem 100%.
Yeah, it is just overwhelming.
Especially if you don’t.
You’re like, well, you know, I kind of need a gift.
I’m not really sure what it is.
It’s for a 13 year old boy.
You know, it could be anything right.
But I think Rufus does a pretty good job of offering up a couple of solutions and you can keep curate or you can keep iterating on your search and it will keep, um narrowing down the type of suggestions that it’s giving.
Uh I’ve recently used it uh for party recommendation, party favor recommendations and, and for a few gift items and it found it pretty useful, but I had to iterate a couple of times, Melissa while we got you.
Let’s switch to some other um some other trends and themes.
I I know you watching um for example, in tech uh P CS, Melissa and who knows, maybe, you know, people were buying those prime day uh P CS.
Obviously, we saw this, we saw the surge um during the pandemic Melissa, we were all at home working or a lot of us were um now a lot of focus on A I enabled P CS.
Do you think that creates a tailwind for the broader industry?
That’s the million dollar question.
Is this going to be the iphone moment?
Are uh A I laptops A, the A I in um Apple, next generation Apple smartphones.
Is that going to be a catalyst for both enterprises and consumers to trade up to gen next generation hardware?
Uh I think that’s something we’re watching very closely in terms of expectations.
Um based on consensus, consensus is already expecting Apple to generate smartphone units sales over the next uh at the end of the next two year cycle, um that will basically meet and ultimately surpass the previous cycle.
So I think that’s already um something that’s getting baked in laptops are trading at about um are are estimated to be about a 15 to 20% below the previous cycles.
So, it’ll be interesting to see how that shakes out and if the A I laptop boom could ultimately, uh, be a real catalyst.
Yeah, I think that’s really a question here.
Melissa.
And I’m curious what you’re seeing in your research because it feels like, like the A I stuff right now is a push.
Right.
It’s not a pull from consumers.
It’s a push from hardware and software companies and it doesn’t feel like um consumers quite know what to do with it yet or how it’s gonna integrate into their daily lives.
How is that gonna sort of play out as these products roll out?
I mean, that’s, you know, it’s an interesting dynamic in the market right now.
Is it going to be consumer driven or enterprise driven?
It, it feels like we’re seeing a push and a pull at from all angles and we’re trying to figure out exactly what’s going to stick and create that broad adoption.
What’s going to be that uh use case that really gets the world excited about generative A I, you know, I think we’ve, we’ve seen um the chat GP T applications, chat bots showing up in places like Amazon and Expedia.
But what else?
And how can it make our lives more productive and efficient?
What tools will, will start to come about that could ultimately make consumers and enterprises wanna upgrade to, to the next hard hardware cycle.
Melissa, thanks so much.
Good to see you.
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