Amazon's next big logistics bet rips a page from its AWS playbook and rattles rivals

CNBC Finance

6 min read

Amazon on Monday took another step to turn its vast logistics network into a revenue-generating machine â a familiar move that is boosting investor confidence in the stock and hitting shares of its competitors. Amazon unveiled what it calls Amazon Supply Chain Services (ASCS), giving businesses access to its full suite of freight, distribution, fulfillment, and parcel shipping capabilities. The offering expands its third-party logistics reach beyond its marketplace sellers to companies across industries, including healthcare, manufacturing, and retail. Among the first to sign up for ASCS are major brands, including Club name Procter & Gamble , 3M , Lands' End , and American Eagle Outfitters , underscoring the growing appeal of Amazon's logistics infrastructure. "It's a no-brainer for Amazon to do this. There's nobody as good as Amazon at supply chain," D.A. Davidson Gil Luria told CNBC in an interview Monday. He framed the launch as "an extension beyond retailers to any company with any type of good or product or input that they need to transport." It's a strategy that Wall Street is likening to how the company's cloud business, Amazon Web Services, evolved. Amazon initially built a cloud platform out of necessity for internal use. It was only later that it grew into Amazon Web Services, which was launched in March 2006. Now the biggest cloud in the world, AWS reported last week that revenue growth re-accelerated to 28% in the first quarter to $37.59 billion. Monday's supply chain move comes as confidence in Amazon's broader businesses continues to build. "Amazon is a more confident Amazon than I've ever heard," Jim Cramer said during Monday's Morning Meeting . He added, "I am very proud that this is our largest position" in the Club portfolio. "There's a lot of things going right, including the semi business, the food business, and the entertainment business. All three are on fire," he concluded. Amazon rose as much as 3% on Monday, hitting another intraday all-time high of over $276 per share. Shares are up 17% year-to-date and a whopping 41% since their 2026 low of $196. AMZN 1Y mountain Amazon 1 year performance Even after the rally, "This could be the breakout for Amazon," Jim said earlier on "Squawk on the Street." "It could fly now." Jim added, "When Amazon wants to win, it can win. It's got heft. It's got the best supply chain in the world." That advantage was immediately reflected in the stock market. Shares of industry incumbents United Parcel Service and FedEx fell 9% and 8%, respectively, making them among the biggest laggards in the S & P 500 on Monday, and signaling that Amazon is becoming a more direct competitor. While still using UPS and FedEx, as well as the U.S. Postal Service, to manage delivery demand, Amazon has scaled back those services considerably over the years as it ramped up its own network. To be sure, some experts caution that the rollout may be getting ahead of the company's operational readiness. "Amazon is still very much in the process of building out a transportation network that is capable of handling close to 100% of their own needs," logistics expert Marc Wulfraat, CEO of MWPVL International, told CNBC in an email. He added that such a timeline could stretch to 2029 or 2030. That suggests the launch could be somewhat premature. While supportive of the effort, Luria at D.A. Davidson also pointed to execution risk, noting that running a supply chain internally is different from offering it as a service to external clients. Amazon can lean on its experience. The company has spent nearly three decades building out its logistics network â from freight moving across air, land, and sea to fulfillment centers processing millions of orders daily to a last-mile delivery system operating seven days a week. Until now, much of that infrastructure was used internally or through its fulfillment services for marketplace sellers. ASCS represents a broader push to monetize that network externally. Given Amazon's massive scale, with revenue expected to reach more than $800 billion this year, Luria cautioned that for now the opportunity is likely incremental rather than transformational. "There's no market that's big enough to make a huge difference to Amazon," the D.A. Davidson analyst said, adding the business is unlikely to drive more than single-digit percentage growth in the coming years. One of the biggest signals of Amazon's capabilities is who is signing on. "It tells you how good they are," Luria. "P & G has been managing their own supply chain for more than 100 years, and yet they decided that Amazon can do it better than them." From a financial perspective, the new business is expected to fall somewhere between Amazon's low-margin retail business and the high-margin AWS unit, according to Luria. Other analysts, including Helen Wang at Phillip Securities, agreed that the strategy mirrors the AWS concept. "What Amazon is doing is essentially turning its logistics network from an internal cost center into an external revenue-generating service," Wang wrote in an email to CNBC. She described it as an "AWS-like strategy, rather than AWS-like economics," noting logistics is a lower-margin business. Bottom line Sticking with the monetization piece, it's clear that investors, including us at the Investing Club, want to see Amazon find ways to leverage its massive infrastructure to generate new revenue streams. "This news serves to justify future capex we hear about relating to the robotics buildout," portfolio analyst Zev Fima said. "Just as the Street is rewarding the fully integrated cloud companies, like Alphabet and Amazon, for their ability to monetize capex spend by renting excess compute capacity to third parties, this should serve to provide that same sense of assurance that any excess logistics capacity we see in the future can be quickly monetized." Alongside Q1 results, Amazon left its full-year capital expenditures guide at $200 billion. While unchanged from its previous outlook, that number was the highest among the hyperscalers' guides. Alphabet went up to $180 billion to $190 billion, with Microsoft coming in at roughly $190 billion. The more avenues Amazon has to make money at scale, the stronger the case becomes that its heavy spending can translate to strong growth tomorrow. (Jim Cramer's Charitable Trust is long AMZN, PG. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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Amazon's next big logistics bet rips a page from its AWS playbook and rattles rivals

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