Amazon (AMZN 0.64%) started with books. The company expanded into selling other products online. Then it shifted into providing cloud services. Today, Amazon also operates grocery stores, healthcare clinics, and an online pharmacy.
However, the e-commerce and cloud giant has somewhat quietly moved into another arena that could be a huge opportunity. Could robotaxis be Amazon's next $100 billion business?
NASDAQ: AMZN
Key Data Points
Amazon's robotaxi milestones
Amazon bought self-driving car start-up Zoox in 2020. The company said then, "We're acquiring Zoox to help bring their vision of autonomous ride-hailing to reality." That reality could be on the way soon.
Zoox began testing its robotaxis in the San Francisco Bay area and Las Vegas several years ago. It later expanded to Austin (Texas), Miami (Florida), and Seattle (Washington).
Amazon announced in its first-quarter update in April 2024 that Zoox has recently achieved several major milestones. In California, Zoox received a permit that allows it to give rides to the public in Foster City (albeit without charging a fare, initially). It's hoping to begin transporting public riders in Las Vegas later this year.
Zoox has made several improvements that have helped move its self-driving car technology forward. Its robotaxis can now drive at higher speeds, at night, and in light rain in California and Nevada. In Las Vegas, its robotaxis can also now operate in a larger area.
Good-to-great expectations
How big is the robotaxi opportunity? It depends on whom you ask.
Markets and Markets projects the global robotaxi market will reach $45.7 billion by 2030. However, the market research company expects the North American market will hit only $13.3 billion. That still reflects a compound annual growth rate of 97.6%.
Fortune Business Insights is more optimistic. It forecasts a global robotaxi market of $118.6 billion by 2031, with key players including Alphabet's Waymo, Tesla, Baidu, Didi Chuxing, Amazon's Zoox, and others.
But we have to turn to Cathie Wood for really great expectations. She predicts robotaxis will be an $8 trillion to $10 trillion market by 2030. Her Ark Invest team even thinks that autonomous taxis might "have the most impact on GDP of any innovation in history." Ark expects robotaxis will cause auto accident rates to plunge by 80% and sales of personally owned vehicles to sink.
Amazon's next $100 billion business?
For robotaxis to become Amazon's next $100 billion business, the market has to grow much faster than Markets and Markets and Fortune Business Insights project. Wood's lofty target doesn't have to necessarily be achieved, though.
Equally important, Zoox must become one of the top players in the robotaxi market. That's quite possible, in my view. However, it won't be easy. Ark Invest thinks Tesla will be dominant. Waymo and others will likely be big winners as well.
I think it's possible Zoox could become Amazon's next $100 billion business. If the robotaxi market indeed reaches $8 trillion by 2030, Zoox would need a market share of only 1.25% to generate sales of $100 billion per year. However, I'm skeptical that the ambitious timeline laid out by Ark Invest will happen.
It's important to remember that Amazon Web Services (AWS) only now has a $100 billion annual revenue run rate. The cloud services unit began operating in 2006. I doubt that the robotaxi market will expand faster than the cloud market did.
Amazon is still a great stock to buy regardless of whether or not Zoox becomes a $100 billion business over the next one, two, or three decades. Artificial intelligence (AI), in general, should continue to be a huge growth driver for the stock for a long time to come. Look at Amazon's robotaxi business as a lottery ticket. It could pay off handsomely, but even if not, investors can profit by buying Amazon stock.
