Trump announces trade deal with EU following months of negotiations
Investing.com -- Truist analysts anticipate that Amazon (NASDAQ:AMZN)’s Project Kuiper, its emerging satellite internet offering, should become “incrementally more important” to the company’s growth story as it accelerates satellite launches and begins commercialization by the end of 2025.
Amazon is scheduled to launch its "2nd batch of satellites later next week (June 16)," part of what will eventually be "a constellation of 3,232 low Earth orbit (LEO) satellites."
Truist believes Kuiper "holds a lot of promise, judging by the growing need for broadband connectivity worldwide and the early commercial success of Starlink."
The analysts project that, assuming a similar adoption pace to Starlink, Kuiper "could deliver annual revenue of ~$6B by 2030" against a global investment estimated in the "$13B-15B range."
While the initiative is still very early, requiring "two to three years to fully deploy its network of satellites," Truist sees "tens of millions of customers worldwide subscribing to this technology, which should afford Amazon an attractive ROIC over time."
Truist acknowledges that the investment intensity is likely to rise over the next two to three years as Amazon builds and launches satellites and customer hardware.
However, they note Starlink is reportedly serving over 5 million subscribers and generating "in excess of $8B in revenue from subscriptions and hardware sales."
For Kuiper, while near-term financial impact visibility is "cloudy," Truist believes that "in the long term, the offering can become a material revenue and growth driver for the company."
They also point out that Amazon’s offering is "reportedly set to be priced at a lower monthly fee vs. Starlink." Truist remains constructive on Amazon, despite the stock nearing their price target.