AMZN Stock: Is This a Breakthrough for Amazon.com, Inc.?

AMZN StockWhat Echo Sales Mean for AMZN Stock

For those who may not know, Amazon.com, Inc. (NASDAQ:AMZN) has opened up a whole new era of consumer electronics—it’s called the “Internet of Things” (IoT).

This new branch of technology vastly increases the upside potential of AMZN stock, particularly because Amazon already has a sizable lead over the competition.

Just look at recent sales of the “Echo,” Amazon’s voice-activated speaker.

Owing to the holiday rush, the $180.00 Echo is completely out of stock until January 19, at least in Amazon’s fulfillment centers. However, some Echos are still available in these antique structures commonly known as “retail stores.” (Source: “Amazon’s Echo speakers sell out during the holiday rush,” Internet Retailer, December 21, 2016.)

Nonetheless, the fact that Amazon sold out is significant. Strong demand for the Echo means that customers are getting used to talking to electronic devices, rather than just using them through screens. That’s the major breakthrough with the Echo.

Think about it: the “iPhone” was a major breakthrough because it put a computer in everyone’s pocket. Mobility was the great “leap forward” for Apple Inc. (NASDAQ:AAPL), and it made AAPL shareholders rich beyond belief. Analysts have been searching for the next “leap forward” ever since.

The Amazon Echo appears to be it. It is controlled through speech, meaning you just issue a command aloud and it obeys. But more to the point, it can be synced to other devices in the home, including the thermostat, TV, and refrigerator.

So even while the Echo is playing your favorite playlist, you can tell it to turn down the temperature or switch on the TV. Meanwhile, the refrigerator can do an internal scan and update your grocery list with whatever is needed.

Then you can tell the Echo to order those things from Amazon.com. Although this scene may sound like science fiction, it closer to reality than most people believe.

But let’s backtrack for a second. What does a voice-activated speaker have to do with the Internet of Things? And more to the point, what does it mean for AMZN stock?

Simple: the voice-activated speaker (the Echo) is a controller for all the soon-to-be-connected devices in the home. That’s what the Internet of Things is all about: connecting home appliances to the Internet to make them easier to use.

The Amazon Echo is the first step any company has made towards capturing the Internet of Things market. And since this market is estimated to be worth tens of billions of dollars, it’s only natural that AMZN stock would surge as a result. We’re keeping a close eye on this trend.