Amazon’s next major retail test arrives with more riding on it than discounted headphones, Kindles, and grocery deals.
The company’s 12th annual Prime Day runs from June 23 to June 26, providing Prime members a 96-hour shopping event that is coming a little earlier than normal on the retail calendar.
That timing is important for Amazon (AMZN). Another reason for investors to watch is to see whether the e-commerce giant can end the period at the high end of its revenue projection, since a June Prime Day might push additional sales into the second quarter.
But a team from Bank of America Global Research thinks the real story might not be in the discounts.
Prime Day is an opportunity for Amazon to promote Alexa for Shopping, its AI-driven deal assistant, just as AI may start transforming how people look for things online, BofA analyst Justin Post notes.
That puts new pressure on Amazon.
The corporation has spent years teaching people to shop first on Amazon. If external AI agents start to influence purchasing decisions, Amazon wants its own shopping assistant to keep users within its ecosystem.
BofA argues this Prime Day could help Amazon do just that.
Amazon Prime Day puts $21.6 billion in focus
What began as a member bonus has become one of Amazon’s biggest yearly retail events.
BofA says this year’s Prime Day could generate $21.6 billion in gross merchandise sales, up approximately 5% year-over-year. That comprises an expected $11.6 billion in first-party gross merchandise value and $10 billion in third-party gross merchandise value.
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The growth rate looks conservative compared to BofA’s forecast of a 55% jump in 2025, but that comparison comes with a big caveat. This year’s year-over-year comparison has been made tougher by last year’s tournament benefiting from the switch to a lengthier 96-hour schedule.
Amazon is also grappling with a regional wrinkle. Prime Day will be held in 27 nations this year, while four markets will take place in the summer. BofA forecasts that later launches, such as Japan and Australia, might cut 3 to 4 percentage points from Prime Day’s year-over-year growth.
But the near-term revenue impact could be substantial.
BofA believes Prime Day may bring in $12.4 billion in incremental gross merchandise volume in the second quarter compared with usual sales over those four days. The business also predicts the event may contribute $8.5 billion in new sales.
That should assist Amazon’s earnings in the second quarter, but it also raises a question investors will have to address down the road: how much demand is actually incremental vs. how much is being dragged forward from July?
Key takeaways for Amazon investors
- Prime Day begins June 23 and runs for 96 hours.
- BofA estimates the event could generate $21.6 billion in gross merchandise volume.
- Amazon is using the event to promote Alexa for Shopping.
- BofA maintained a Buy rating and $310 price objective on Amazon.
- A June Prime Day could help second-quarter sales while creating a third-quarter comparison headwind.
But BofA’s setup remains constructive.
The brokerage maintained its Buy rating on Amazon while maintaining a price goal of $310 on the stock. That implies a substantial upside from the $237.50 share price cited in the June 18 research note.
More importantly, BofA says Amazon has a number of supports into the event including robust retail spending data through May and sustained progress at Amazon Web Services.
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Prime Day carries a familiar risk.
Margins might get squeezed by big promotional events when shops go head to head on price. But BofA says Amazon could be able to mitigate some of that pressure via logistics efficiency and a potential advertising lift during the event.
Which makes Prime Day more than a shopping holiday. It’s also a test of whether Amazon can turn deal-hunting traffic into higher-margin advertising income, more Prime involvement, and more frequent use of its AI shopping tools.
Michael M. Santiago / Getty Images
Amazon uses Alexa to defend its shopping turf
The biggest Prime Day battle may be happening before consumers even fill their carts.
Amazon is pitching Alexa for Shopping as a means for people to locate personalized offers, check pricing and act when things hit goal prices. BofA said the program can offer personalized recommendations on deals and products based on a user’s purchasing history and preferences.
The feature set is aimed to make Alexa more useful during a high-urgency purchasing event. Customers can see pricing history for up to 365 days, set up price alerts and activate auto-buying when an item hits a selected price point.
That might make Prime Day a perfect display.
“We continue to believe that AfS will be an essential tool in protecting direct traffic for Amazon,” Post wrote. BofA estimates Alexa for Shopping can generate more than $200 billion in incremental gross merchandise volume by 2035.
The quote exposes the bigger investor problem.
Amazon is already the king of online buying, but its reign rests on customer habit. Amazon is fast, reliable and familiar. Shoppers browse on Amazon, search on Amazon, and buy through Amazon.
AI threatens to muddy the waters.
If users start asking general-purpose AI assistants to get them the best goods, compare costs or even complete purchases, Amazon risks losing some of the direct traffic that makes its marketplace so powerful.
That’s why Alexa for Shopping is important.
It gives Amazon a chance to retain the product search, recommendation and checkout journey within its own borders. It could also assist increase conversion rates by turning wide shopping intent into quicker buying choices.
BofA thinks the long term profit possibility is large. The business thinks Alexa for Shopping may earn $20 billion in incremental retail profit by 2035.
That projection might be years away, but Prime Day affords Amazon a near-term opportunity to boost awareness.
The event sends shoppers to Amazon while they are already seeking for deals, comparing pricing and making faster-than-usual purchasing selections. And it is just the kind of setting where a shopping assistant can be really handy.
The story, to investors, is not about how much Amazon sells over four days in June.
The question is whether Prime Day helps Amazon transform Alexa into a purchasing habit before outside AI tools become a greater threat.
BofA anticipates Amazon to report second-quarter revenue at or above the high end of the company’s estimate range of $199 billion. Should that happen, early scheduling of Prime Day, better retail demand and AWS momentum might all be part of the same positive argument.
But the challenge of the longer term is more acute.
Amazon needs more than customers to turn out for Prime Day It forces customers to let Amazon’s own AI help pick what they buy next.
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