There’s no denying that Microsoft (NASDAQ:MSFT) co-founder and former CEO Bill Gates knows a thing or two about technology. However, his recent prediction about Amazon’s (NASDAQ:AMZN) e-commerce platform might scare some investors into divesting their AMZN stock.
I’d like to reassure them that Amazon is here to stay and there’s no need to panic-sell your shares.
Of course, there’s more to Amazon than its e-commerce app. For example, the company generates significant revenue from its cloud computing platform, Amazon Web Services.
Still, if Gates is apparently suggesting that Amazon’s e-commerce platform will be obsolete someday, that’s a profound assertion that’s worth looking into. So, let’s find out what Gates actually said and then decide whether it’s smart to stay invested in Amazon.
| AMZN | Amazon’s | $130.15 |
Will Generative AI Destroy AMZN Stock?
Amazon, and especially AWS, is certainly a beneficiary of machine learning. Yet, Gates seems to propose that AI will make Amazon’s e-commerce app unnecessary someday.
Per Fortune, Gates is quoted as saying, “There will be one company that creates the personal agent that understands all of your activities…” Presumably, Gates is “referring to the decades-old promise of a truly all-knowing A.I. assistant.”
My first question is: Why does it have to be one company that provides this type of “personal agent”? And, why couldn’t Amazon (or a startup that Amazon ends up acquiring) be one of the “personal agent” providers?
In any case, here’s the rest of the Gates quote:
“Whoever wins the personal agent, that will be a big thing because you’ll never go to a search site again. You’ll never go to a productivity tool again. You’ll never go to Amazon again. Everything will be mediated through your agent.”
Gates is known to be a big-picture thinker, and I’m seeing a lot of exaggeration in this quote. Again, I have questions: Why wouldn’t a “personal agent” direct users to Amazon to make purchases? Or better yet, couldn’t an AI-powered “agent” have Amazon-shopping functionality embedded within it?
Amazon’s Market Dominance Is Indisputable
My point is, there’s no reason to worry about generative AI destroying AMZN stock. Amazon will undoubtedly find ways to work with and benefit from AI-enhanced “personal agent” technology.
Besides, Amazon’s market dominance in the U.S. retail sector is undeniable, and the advent of “personal agent” technology isn’t likely to derail Amazon.
According to JPMorgan analyst Christopher Horvers, Amazon “has 40% plus U.S. e-comm share and should become the largest U.S. retailer in 2024.”
Horvers expects Amazon to topple the almighty Walmart (NYSE:WMT) as the number-one U.S. retail business. I concur with this prediction, as the Covid-19 pandemic got shoppers accustomed to buying many items online.
Sure, Walmart has its Walmart+ subscription delivery service. However, many people are already subscribed to Amazon’s Prime service and don’t feel any need to switch.
There may soon be an additional incentive for Prime members to stay with the service as Amazon is reportedly considering “offering low-cost or possibly free nationwide mobile phone service to Prime subscribers.”
AMZN Stock Will Be Fine Despite Gates’s Warning
Amazon is an unstoppable powerhouse of a company. Gates is a smart man, but the aforementioned quote may involve some exaggeration regarding the demise of Amazon’s e-commerce platform.
If anything, Amazon should actually benefit from generative AI, not lose market share because of it. So, there’s no need to lose sleep over Gates’s controversial declarations. Just stay the course with AMZN stock as it will almost certainly reward patient investors over the long run.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.