Is Amazon's (AMZN) Logistics Advantage Enough to Win Grocery Market Share?

Amazon.com Inc. (NASDAQ:AMZN) is one of the most profitable tech stocks to invest in now. On August 22, Wells Fargo’s Ken Gawrelski highlighted the potential and risks of Amazon’s push into grocery retail, maintaining an Equal Weight rating with a $245 price target.

The analyst estimated that for every percentage point of U.S. grocery share captured, Amazon.com Inc.’s (NASDAQ:AMZN) worst-case operating income could range between $2.5 and $3 billion, given the margin and operational complexities of the business.

Earlier, on August 14, Morgan Stanley’s Brian Nowak reiterated a Buy rating with a $300 target, pointing to Amazon.com Inc.’s (NASDAQ:AMZN) deeper grocery expansion as a long-term growth driver. The company has broadened its offerings on Amazon.com, including fresh and perishable items, and reduced delivery fees for Prime members. Same-day grocery delivery is now available in over 1,000 locations and is expected to expand to 2,300 by year-end.

In 2024, Amazon.com Inc. (NASDAQ:AMZN) recorded more than $100 billion in sales of grocery and household essentials, excluding sales from Whole Foods and Amazon Fresh. Analysts believe the company’s scale, logistics network, and data-driven operations provide an edge in capturing a share of the $1.5 trillion U.S. grocery market.

Amazon.com Inc. (NASDAQ:AMZN) operates across e-commerce, digital content, advertising, and cloud computing. Its online and offline stores offer both in-house and third-party products, while its Amazon Web Services (AWS) division runs one of the world’s largest data center networks.

While we acknowledge the potential of AMZN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.