Amazon.com Inc. (AMZN) recently announced that its low-Earth orbit satellite internet project “Leo” has deployed a sufficient number of in-orbit satellites and plans to begin “initial service” later this year. The latest deployment was completed by United Launch Alliance’s Atlas V rocket, which sent 29 new satellites into orbit early Thursday morning Eastern Time. With this addition, the total number of in-orbit satellites for the “Leo” project has surpassed 390. Chris Weber, Vice President of Business and Product for the project, confirmed on social platforms that this scale is “sufficient to support continuous service within the initial latitude range.” This move marks a critical step for Amazon in challenging SpaceX’s Starlink in the low-Earth orbit satellite internet sector.
Although an “enterprise preview” was launched for select corporate customers in November of last year, formal commercial service for consumers and government customers has not yet commenced. Weber stated that initial commercial service may only be available to users in specific geographic regions, and through additional launch missions, the company will “gradually expand coverage and increase network capacity.” In the satellite internet race, SpaceX holds a lead of approximately four years over Amazon, having deployed nearly 10,000 satellites and surpassed 10 million global users. Amazon unveiled the project (later renamed) in 2019, aiming to build a mega-constellation of roughly 7,700 satellites, though the project had been hindered by a shortage of launch vehicle capacity.
In January of this year, when applying to regulators for an extension of its deployment deadline, Amazon cited delay factors beyond its control, including the limited availability of launch vehicles. To secure launch capacity, Amazon signed multiple historic launch agreements, reserving rocket services from several aerospace companies, and subsequently purchased additional launch services from SpaceX. However, several of these launch service providers have experienced development delays. In May of this year, Blue Origin’s New Glenn rocket suffered an accident on the launch pad during a static fire test; the rocket had been scheduled to carry a batch of Amazon satellites in the near future. Blue Origin is currently rebuilding the launch pad and investigating the cause, with its senior leadership expressing determination to resume flights of the rocket later this year. To improve deployment efficiency, Amazon stated that its next launch mission will switch to ULA’s Vulcan heavy-lift rocket, which offers greater carrying capacity.
While pushing forward with its satellite project at full speed, Amazon’s core business remains robust. Retail operational efficiency continues to improve, while the primary long-term growth driver comes from Amazon Web Services. The cloud business is delivering strong revenue growth and contributing the majority of operating profit. Over the past 12 months, Amazon generated $148 billion in operating cash flow overall. This strong cash flow constitutes a significant competitive advantage in the artificial intelligence sector, supporting large-scale investments in data centers, networks, and custom chips.
Its self-developed Trainium AI accelerators and Graviton central processing units currently generate an annualized revenue exceeding $20 billion, with related commitments from major AI players such as Anthropic and OpenAI surpassing $225 billion. In the first quarter, AWS revenue grew 28% year-over-year, and over the past 12 months, this business segment generated $137 billion in revenue and $48 billion in operating profit. Analysts point out that the current decline in free cash flow is primarily attributable to substantial investments in AWS capacity expansion. In this context, operating cash flow becomes a more effective metric for valuing the stock. On a per-share basis, the stock currently trades at approximately 18 times operating cash flow, below the 32 times seen at the time of the stock split in 2022. Given its stronger profitability and deep AI capabilities, the stock appears more attractive now than it did then.
