Amazon (AMZN) Eyes Zoox to Bolster Self-Driving Initiatives

Amazon AMZN is reportedly in talks to acquire Zoox, a developer of self-driving technology.

Notably, the deal, which is supposedly in “advanced” talk stage, is in sync with the e-commerce giant’s aggressive efforts to strengthen presence in the autonomous driving space.

We believe the deal will provide Amazon a strong exposure to autonomous driving space on materialization. This, in turn, is expected to provide a competitive edge to the company against the existing players such as Alphabet GOOGL, Intel INTC, Baidu and Yandex YNDX.

Further, the latest move is in sync with the company’s commitment toward foraying into the uncharted territories in order to diversify business. These endeavours have been instilling investor optimism in the stock.

Coming to the price performance, Amazon has returned 31.1% on a year-to-date basis, outperforming the industry’s rally of 19.4%.

Autonomous Driving Holds Promise

In this data-driven world, self-driving technology and vehicles are gaining strong traction. Moreover, autonomous driving space presents robust prospects in the near-term as well as in the long run.

Amazon’s growing efforts in this particular market are likely to help in reaping the benefits from it. Apart from the latest move, the company has teamed up with companies developing driverless car software at CES 2020.

Further, the company’s investment in Aurora, a startup that develops technology to power fully autonomous vehicles, remains noteworthy.

All these factors will aid the e-commerce giant to rapidly penetrate the autonomous driving space, which as per a report from Allied Market Research is expected to hit $556.67 billion by 2026 at a CAGR of 39.47% between 2019 and 2026.

Further, a report from Grand View Research shows that the global self-driving car and truck market is projected to see a CAGR of 63.1% between 2021 and 2030.

Furthermore, a Market Data Forecast report indicates that self-driving cars market is expected to hit $56.21 billion in 2020 and reach $220.44 billion by 2025 at a CAGR of 36.5% between 2020 and 2025.

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. revenue-ttm | Amazon.com, Inc. Quote

Intensifying Competition

Amazon’s plans with Zoox are likely to intensify the competition in the self-driving space. Notably, Alphabet enjoys the first-mover advantage in this space on the back of its well-performing Waymo vehicles that have recently exceeded the 20 million miles mark.

Further, Waymo project has recently raised $2.25 billion funding from the outside investors – Silver Lake Management, Canada Pension Plan Investment Board and Magna International among others, in order to commercialize its self-driving vehicles.

Apart from Amazon and Alphabet, companies like Intel, Yandex and Baidu are also leaving no stone unturned to capitalize on prospects of this particular market.

Notably, Yandex has invested $35 million in its self-driving program to date. Its autonomous vehicles have driven 2 million miles to date.

Further, Baidu has received license for five of its self-driving vehicles in China. Further, the launch of its Apollo Robotaxi fleet of 45 self-driving cars in Changsha, Hunan province, for trial operations in urban road environments remains a positive.

Meanwhile, Intel’s autonomous driving unit — Mobileye — has announced two new agreements in China and South Korea with the SAIC and Daegu Metropolitan City, respectively. These agreements are likely to expand Intel’s global presence in driver-assistance systems and autonomous mobility-as-a-service.

Nevertheless, Amazon’s aggressive approach in the driverless technology space is noteworthy.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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