Amazon (AMZN 3.43%) finally got one of its long-awaited new businesses off the ground. Literally.

The e-commerce and cloud computing giant launched two satellites into orbit earlier this month to test its satellite-internet service Project Kuiper. The service, announced in 2019, will compete with SpaceX's Starlink, which has a massive head start.

But Amazon's committed to catching up. It plans to spend more than $10 billion on launching satellites. It's signed deals with three space companies, including Jeff Bezos' Blue Origin, to facilitate its plan to put 3,236 satellites in orbit.

Amazon CEO Andy Jassy has compared the potential of Project Kuiper to that of Amazon Web Services (AWS), its immensely successful cloud-computing business. Should investors buy into Amazon before the stock price blasts off as well?

Taking on Elon Musk

The leader in the satellite-internet industry is Elon Musk's SpaceX. The company says it already has 2 million customers for its Starlink internet service, and it's launched over 4,800 satellites. What's more, its reusable rockets allow it to launch much faster than competitors, so investors should expect the gap between the number of SpaceX satellites in orbit and its next-closest competitor to keep widening.

Amazon is taking a different approach. Its goal is to be the most efficient provider. Its satellites will have better coverage and capacity at a lower cost and with a longer useful life. In other words, it wants to get more out of each launch. That's why it's only planning for 3,236 satellites total, while SpaceX is rapidly approaching 5,000.

Whether Amazon's efforts will pay off remains to be seen. The launch earlier this month will be its first end-to-end test of the system. It'll see exactly what kind of service it can deliver from space to a residential antenna. It expects to launch commercial service in the first half of next year.

A big opportunity

In his 2022 letter to Amazon shareholders earlier this year, CEO Andy Jassy said Project Kuiper is an area where he sees a unique opportunity.

He compared it to Amazon Web Services in that:

It's capital intensive at the start, but has a large prospective consumer, enterprise, and government customer base, significant revenue and operating profit potential, and relatively few companies with the technical and inventive aptitude, as well as the investment hypothesis to go after it.

SpaceX is already showing strong results. It generated $1.4 billion in revenue last year from Starlink, according to a report from The Wall Street Journal. It also spent $3.2 billion in capital expenditures last year. The growth has been worth the investment, though. SpaceX doubled its customer base through the first nine months of 2023. That said, those numbers are still far below the company's initial outlook.

Nonetheless, there's a big opportunity to connect more households to the internet and provide better mobile service for customers, for instance, in RVs and boats. And most importantly, Amazon stands to benefit in multiple ways by pushing satellite-internet technology forward.

How Amazon can win even if it doesn't beat SpaceX

The more people with affordable access to high-speed internet, the better it is for Amazon. Remember, Amazon's core business is online retail. Its second-biggest business is a public cloud-computing provider, the backbone of the modern internet. The more people there are on the internet, the more people there will be to use those services. Jassy laid this out in his letter:

Imagine what they'll be able to do with reliable connectivity, from people taking online education courses, using financial services, starting their own businesses, doing their shopping, enjoying entertainment, to businesses and governments improving their coverage, efficiency, and operations.

Everything he describes runs through Amazon in one way or another. By improving satellite internet technology and putting pressure on competitors to offer lower prices and better coverage, Amazon can benefit.

So, a $10 billion investment in a project that could ultimately produce billions in annual revenue in and of itself is already a good bet for Amazon to make. For a company with so much to gain from broader internet coverage, it's a fantastic bet.

It's this long-term outlook and multipillared approach that makes Amazon a great long-term investment. After pulling back on capital expenditures in other areas, it should have plenty of cash to pile into this nascent project with a big potential payoff. It's not too late to buy shares despite the stock's 56% increase in price since the start of the year. There's still a lot of room left to run.