Amazon’s (AMZN) robot takeover may be coming, and President Trump’s tax plan could help pay for it.
The sweeping corporate tax reform, part of the One Big Beautiful Bill Act (OBBBA), could give Amazon the financial tailwind to accelerate its investment in warehouse robotics and AI.
According to a Morgan Stanley report, Amazon stands to gain an annual $15 billion in free cash flow under the new bill. The estimate is based on tax accounting projections for 2025 through 2027, with benefits tapering slightly to $11 billion by 2028.
Morgan Stanley notes Amazon could reallocate part of the windfall toward next-generation investments. The tax benefits are part of a broader package to encourage tech giants like Amazon, Google (GOOG), and Meta (META) to invest “more aggressively” in AI, chips, and infrastructure.
Amazon is set to report its second quarter earnings Thursday after the market close. Its stock has gained 7% year to date, behind the S&P 500’s (^GSPC) 8% advance.
Investor expectations for Big Tech are sky-high as the “Magnificent Seven” stocks continue to trade at outsized valuations, making it crucial for the giants to keep up their competitive advantages.
Analysts say warehouse robotics underpins key parts of Amazon’s retail and logistics operations. Investing 50% of its new free cash flow, or about $7.5 billion a year, into robotics, would be a game changer, Morgan Stanley’s Brian Nowak wrote.
Morgan Stanley estimates if 10% of Amazon’s global fulfillment volume runs through next-gen robotics warehouses, the company could save between $2 billion and $4 billion annually by 2027. Cost reductions scale up to nearly $10 billion a year if 25% of units are handled by advanced robotics.
Amazon currently operates approximately 700 fulfillment centers. A $7.5 billion investment could potentially build 17 new robotics fulfillment centers each year at around $450 million apiece or retrofit 75 existing warehouses at $100 million each.
Analysts say Amazon is also likely to pour tax savings into its cloud and generative AI business. In Q1, AWS sales grew 17% year over year to $29.3 billion.
Maxim Group analyst Tom Forte points out that Amazon could benefit from AI on both sides — growing AWS through selling AI tools while using automation technology to reduce corporate labor costs.
“I’m highly confident it will result in more investment spend, and definitely not dividends,” he said of Amazon’s new tax windfall. “The big difference between Amazon under Bezos and Amazon under Jassy is that Jassy has found a way to invest while still generating margin and cash flow.”
