Amazon Revives Smartphone Ambition — Does It Matter for AMZN Stock?

Ten years and six months after discontinuing its only smartphone, the Fire Phone, e-commerce giant Amazon’s AMZN -0.53% ▼ dream of wearing the phone-maker badge may be flickering back to life.

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According to Reuters, the Washington-based diversified technology conglomerate has launched a project, internally called “Transformer,” to develop a new smartphone. Insiders told the outlet personalization features may form the core of the device, with Amazon seeking seamless integration with its Alexa smart home assistant.

A Smartphone Comeback: What’s in It for Amazon?

The new plan comes at a time when artificial intelligence companies are racing to shift AI from model training to widespread use by everyday users, enterprises, and industrial manufacturers. A smartphone of its own could give Amazon a stronger anchor for an Apple-like AAPL -0.39% ▼ ecosystem, knitting together its e-commerce, Prime Video, and Prime Music offerings in a single, integrated, AI-enhanced experience.

This could mark a new revenue opportunity for Amazon — which continues to grow its sales consistently — across several of its business areas, particularly its online store, third-party seller services, advertising, and subscription portfolio.

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This is particularly important as Amazon continues to pump billions of dollars into building out its AI infrastructure and has just secured an order for one million AI chips from chipmaking giant Nvidia NVDA -1.02% ▼ for its cloud computing unit.

Beyond cloud-based systems for enterprise applications, consumer electronics is another key area tech supermajors are looking to capitalize on the AI boom. For instance, Meta META -1.46% ▼ has reportedly formed a team of over 200 workers to develop several AI-powered devices, including smart glasses.

** Is Amazon a Buy or Hold?**

On Wall Street, analysts remain highly bullish on Amazon’s shares and continue to assign a Strong Buy consensus rating to the stock. This is based on 40 Buys and three Holds issued over the past three months.

In addition, the average AMZN price target of $280 suggests about 34% upside from current trading levels.

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