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Investing.com -- Bank of America analysts suggest that Amazon (NASDAQ:AMZN)’s burgeoning ambitions in robot delivery could yield "billions in savings," despite acknowledging significant hurdles.
The e-commerce giant is reportedly exploring the use of humanoid robots for package delivery, with internal testing already underway.
According to a report cited by BofA, Amazon is designing "an indoor obstacle course for humanoid robots" to train them for package delivery.
They note that a report indicates the robots could eventually "ride in the back of Rivian (NASDAQ:RIVN) vans before leaping out to deliver packages."
While Amazon is developing the AI software, it is expected to "test several third-party hardware solutions," with one Unitree robot estimated at around $16,000 per unit.
If successful, BofA notes there could be a "large financial incentive [for Amazon] to automate."
However, BofA cautions that there are still "several hurdles likely to overcome."
Similar to autonomous vehicles, they expect "several years of testing before trials could begin."
Obtaining regulatory approval on a local basis would also be a challenge, limiting rapid geographic expansion. Furthermore, "consumer acceptance of robot delivery would likely take time," with BofA believing it would be "much easier to automate internal processes than external."
Despite these challenges, BofA maintains its Buy rating on Amazon, anticipating a substantial long-term opportunity.
Their analysis estimates that "robotics in delivery could drive over $7.1bn in annual savings by 2032," not including potential savings from humanoids.
BofA also sees "leading robotics infrastructure" enabling Amazon to potentially move its first-party operations to profitability as a low-cost provider and further improve third-party shipping margins, ultimately driving its long-term retail margin opportunity to 11%.