SpaceX Reported to File for IPO—Here Is Another Reason to Buy Amazon Stock

TradingKey - According to a report on Reuters, SpaceX has confidentially submitted an IPO to be the largest since the original record of $25 billion. Some investment analysts estimate that based on current trends, investor interest, and the projected profitability of Starlink, SpaceX's current value will be approximately $1.75 trillion.

An IPO for SpaceX would create another publicly traded company that focuses solely on providing customers with high-speed internet through the use of satellite technology, as well as bringing more investors to the larger market of Low Earth Orbit (LEO) satellite operators, where Amazon (AMZN) is also working to establish its presence using over 3,200 satellites in LEO, and allegedly negotiating with Globalstar (GSAT) to acquire that company. This is another reason to invest in Amazon in 2026.

News About SpaceX IPO

The SpaceX Corporation IPO filing signifies a turning point for commercial space companies. Details of the filing are not yet available, but many in the industry believe that an IPO could happen within the next few months, contingent on market conditions and regulatory approval.

SpaceX has demonstrated impressive achievements that have inspired significant interest from potential investors, including completing approximately 200 successful launches of its Falcon 9 rocket and developing a unique, reusable rocket design. In addition, SpaceX has received a number of NASA contracts for crew transportation and return lunar missions. Furthermore, SpaceX provides an incredible boost to its valuation through its Starlink program.

Starlink presently services close to 4 million customers across 70-plus countries providing yearly revenue that is measured in billions. Starlink has plans to grow into a constellation of 42,000 satellites, which puts SpaceX in a position to capture a disproportionate share of the global broadband marketplace, especially in rural markets where there has been little or no attention given to broadband services.

The comparative landscape between the two companies serving aerial communications is apparent; Starlink now has over 9,500 satellites in orbit that are connected to more than 9 million users globally, comprising individual consumers, businesses, and government entities, including U.S. national security agencies using Starshield; while Amazon has approximately 180 satellites currently in orbit and has the same market targets. If SpaceX proceeds with an IPO, satellite unit economics, Total Addressable Market (TAM) across consumer, business, and defense markets, and synergies with cloud computing platforms will likely be the focus of the market conversation. In effect, a SpaceX offering today will not only be an event for SpaceX; it also presents a new reason to look at AMZN as a diversified way to participate in the longer-term connectivity theme.

Reason 1 to Buy Amazon Stock: Globalstar Deal Could Reshape the Starlink Rivalry

Reports indicate Amazon is working to acquire Globalstar, a satellite operator that operates Low Earth Orbit satellites for providing voice, data, and asset tracking services to enterprise, government, and consumer customers, for approximately $9 billion. However, one complication in this acquisition is that Apple (AAPL) owns approximately 20% of Globalstar, which means that the strategic and commercial relationship between Amazon and Apple with respect to the provision of device-based satellite services will have to be dealt with as part of any acquisition.

There are three potential changes the commercial space landscape would experience if Amazon completes a deal with Globalstar.

First, a combination of spectrum and regulatory assets would facilitate rapidly scaling up Amazon's existing LEO constellation using Globalstar to enhance coverage, backhaul, and ground infrastructure.

Second, global access to Amazon devices/services and IoT services would also allow Amazon to test pricing/service tiers more rapidly through Globalstar's established processes without having to wait for its entire constellation to be built out.

Last, this transaction will lead to a more defined two-platform structure in the Western hemisphere: Starlink as the long-term large-scale player, while Amazon operates a combination of Kuiper and Globalstar.

Historically, the presence of competing providers has generally driven improvements in service quality and produced a wider selection of enterprise/government plan offerings. For investors, this development creates a much clearer story for how Amazon will monetize connectivity for Prime households, third-party sellers, logistics partners, and industrial customers who are already utilizing AWS.

Reason 2 to Buy Amazon Stock: AWS Is Built for an AI-Driven Reacceleration

AWS continues to be the biggest generator of income for Amazon, and while the narrative about space grabs most of the media attention, AWS has begun to rebound after a period of slow growth attributed to optimization cycles, and is currently achieving revenue growth of 24% year-on-year growth or the fastest quarterly growth rate in more than 4 years. There are some structural advantages that will support continued growth in relation to the adoption of Artificial Intelligence.

OpenAI and Amazon have expanded their partnership by committing to consume approximately 2GW of Trainium capacity through AWS. Trainium is Amazon's custom-designed chip that runs on AWS for application development and inference. The addition of OpenAI to the mix will lend even more credibility to Amazon's silicon roadmap. Additionally, these companies have plans to build a "stateful" runtime environment on Amazon Bedrock and allow for long-running applications to maintain memory across sessions; this would be ideal for applications that need to have memory retained across sessions during much more complicated workflows. On the other hand, Microsoft (MSFT) has all the exclusive rights to the stateless OpenAI APIs, which are most appropriate for one-off task completion. For those workloads that need more historical context and to use data stored on AWS, it seems that there is a natural synergy with using the Bedrock stateful environment.

AWS has reported a backlog of about $244 billion in customer commits to future services exceeding present capacities. Amazon's significant planned investments in data centers and Artificial Intelligence equipment will help continue to build this backlog. While capital expenditure numbers draw the attention of most investors, when those funds go toward providing capacity already having been contracted or experiencing high demand, the long-term returns to revenue and profit margins are attractive.

Reason 3 to Buy Amazon Stock: Advertising and E-Commerce Are Quiet Compounders

The advertising business at Amazon is often overlooked in the larger context of cloud and retail, but it continues to grow at a rapid pace. In the most recent quarter alone, ad revenue increased year on year by over $21.3 billion (+23%). Additionally, Amazon has created a powerful combination of two very scarce resources in advertising—detailed intent data based on billions of individual shopping transactions and a significant amount of media assets—such as Prime Video, Twitch, Fire TV, and Alexa—that can be used to promote the products that are sold on the Amazon platform. Plus, since there is already a large amount of infrastructure in place, there are generally strong margins associated with adding incremental advertising revenue to the company’s overall revenues, which is very much appreciated given the other areas of the business are capital intensive to support.

Retail is becoming more structurally efficient as Amazon continues to deploy robots into its operations, with over 1 million robots distributed across more than 300 facilities allowing for faster execution of orders and reduced operating costs. With the way the retail network has been built out over time, there have been significant efficiencies that can now be realized and capitalized on through improved unit economics. Implementing faster delivery options and adopting additional automated operational processes create a retail delivery network that is very hard to match by other retailers. The improvements to this area will translate into improved results on operating income, even if the overall year-on-year growth in the retail segment is likely to be soft.

Reason 4 to Buy Amazon Stock: Amazon’s Bet on Autonomous Driving Is Becoming Real

In 2020, Amazon acquired Zoox to create robotaxis designed for specific purposes, and as of today this service currently operates offering free rides in both Las Vegas and San Francisco with an approximate total of 350,000 passengers already having used the service. This year, Zoox intends to continue expanding service within both locations while also providing limited service locations in Austin and Miami. The company applied to receive approval from the National Highway Traffic Safety Administration (NHTSA) to provide commercial rideshare services with a potential fleet size of 2,500 robotaxis.

Zoox is currently competing against Waymo (the autonomous division of Alphabet Inc.) and has competitors including Tesla and Uber in a market that is approaching commercialization. As a significant player in this developing area of the transportation industry, Zoox's potential growth is extremely large. Morgan Stanley has estimated the potential market for robotaxi services could be over $1 trillion within the United States alone by 2032 and estimates that Zoox could capture roughly 12 percent of all autonomous taxi trips by that date. Additionally, for Amazon the acquisition of Zoox represents not only an additional potential revenue stream, but it also could be a major new revenue stream compared to other revenue streams of e-commerce, advertising, and cloud computing. These new revenues could also complement Amazon's logistics operations by creating additional platforms through which to deliver advertisers and subscription-based products over time.

Reason 5 to Buy Amazon Stock: AMZN Valuation Sits Well Below Its History

While Amazon has consistently delivered strong execution, its stock has experienced sub-par price performance when compared to the broader S&P 500 over the past five years (Amazon approximately 30% vs. S&P 500 +60%). Amazon has grown its earnings significantly over that time period, yet the stock is currently priced at approximately $200 with diluted EPS over trailing twelve months at $7.18, giving it a price-to-earnings multiple of below 28, which is substantially lower than its historical averages. Amazon has generated close to $78 billion of profit over the prior four quarters and currently has a market capitalization of approximately $2.1 trillion; and therefore, an opportunity for Amazon stock to trade at a historic low relative to where it has traded in the past exists.

The decline in dollar values of Amazon’s stock relates primarily to macroeconomic factors rather than fundamentals of Amazon's operations. Investors have been concerned with Amazon’s capital spending program of approximately $200 billion and what consumer demand and ability to spend will be like given high oil prices amidst geopolitical threats. Amazon's capital spending program is primarily aimed at building out its cloud and AI infrastructure—areas in which it has significant demand in its AWS backlog and through partner networks. When you set aside short-term fears about one-year uncertainty and the multi-year growth drivers related to Amazon surrounding cloud usage, advertising, e-commerce operating efficiencies, autonomous driving, and satellite connectivity, Amazon stock valuations will appear more attractive longer-term than short-term headline news will indicate.

Should You Invest in Amazon in 2026?

Amazon's potential for success in 2026 relies largely on a combination of multiple factors; however, they do not hinge primarily upon any singular event. For example, while an IPO for SpaceX may positively influence the market attitude toward satellite connectivity valuations, the rationale for investing in Amazon rests solely on a multitude of additional points/reasons.

With multiple revenue streams, Amazon's overall company still possesses resilience and strength that do not exist for many pure-play space-based companies at this time. Additionally, due to the combination of large-scale, cash-generating businesses acting as financial sources to fund early-stage companies that have not yet generated revenue, Amazon's risk-adjusted profile appeals to a wide range of investors for achieving their investment goals.

In other words, instead of trying to time an entry into Amazon based on external events (such as events associated with SpaceX), investors may wish to evaluate the current valuation of Amazon compared to its potential long-term earnings across several different types of businesses. While Amazon's space opportunity has the potential to provide investors with additional optionality as a potential source of future returns, the main driver for the overall investment case for Amazon rests squarely upon execution in those three key areas of cloud, advertising, and operational efficiency; and thus far, Amazon has consistently demonstrated its ability to execute successfully within each of those areas over extended periods of time.