Amazon’s robotics ambitions can result in billions of dollars in cost reductions for the company, according to Morgan Stanley. Amazon plans to replace 600,000 jobs with robots in the coming years and is ultimately striving to reach its goal of automating 75% of its operations, the New York Times reported Monday, citing several internal strategy documents. The e-commerce giant plans to add around 40 next-generation robotic warehouses by the end of 2027 and has already started renovating its older distribution centers, according to the report. These efforts could eliminate thousands of full-time human jobs in Amazon’s warehouses over the next decade — and the money could start flowing in just a few years. Morgan Stanley analyst Brian Nowak estimates the move could translate into between $2 billion and $4 billion in recurring annual savings for the company by 2027. The analyst reiterated his overweight and $300 price target on Amazon stock, suggesting it could jump 35.1%. This year, Amazon shares are down about 0.3%, making the mega-cap tech stock last among the members of the “Magnificent Seven.” The decline is partly due to Amazon’s weak operating profit forecast for the third quarter. Analysts who remain bullish on the stock are betting on the growth of its Amazon Web Services cloud computing service, as well as its retail sales and online advertising. “In the near term, we expect AWS growth to be the most important for AMZN stock,” Nowak wrote in a note to clients Wednesday. “However, we continue to believe the market is underappreciating AMZN’s GenAI advancements in its retail business, with robotics-based efficiencies. » AMZN 1Y Mountain Amazon stock performance over the past year. To be sure, Morgan Stanley’s cost savings estimate could end up being on the softer end of Amazon’s ambitious goals. Nowak’s savings calculations were based on the estimated cost of about $3 to fulfill each Amazon order, with bots potentially making that process 20 to 40 percent cheaper. This would then result in savings of 60 cents to $1.20 per order. The analyst pointed to comments Amazon CEO Andy Jassy made during the company’s third-quarter 2024 earnings call. At the time, Jassy mentioned that Amazon’s most advanced robotic warehouse in Shreveport, Louisiana, had reduced fulfillment costs by about 25%. Jassy also said in July that Amazon was using more than 1 million robots in its facilities, which he said “improved profitability” and led to improved delivery times and reduced costs for customers. “For perspective, we are currently modeling AMZN ’27’s EBIT of approximately $124 billion. That said, (Monday’s) report suggests that the savings may actually be greater,” Nowak said. The Times reported that Amazon’s automation team estimates the company can avoid hiring more than 160,000 U.S. human workers it would otherwise need by 2027, which would reduce costs by about 30 cents on each item Amazon ships to its customers. In this case, Nowak said a savings of 30 cents per unit equates to about $10 billion in savings. “This seems high to us (given that next-generation robotic warehouses will only fill perhaps 10-20% of units by then). But it will be important to track these estimates with AMZN and industry experts, as it could imply that AMZN is poised for even greater savings than expected in robotics,” Nowak said. Amazon, the country’s second-largest private employer, on Wednesday introduced a new robotic system called “Blue Jay” that can multitask in its warehouses. The company said the system is so far capable of picking, storing and consolidating “approximately 75% of the items we store at our sites.”