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Amazon (AMZN) Snaps Up Human-Aware AI Startup Body Labs

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Amazon.com, Inc. (AMZN - Free Report) has acquired Body Labs, a startup that develops AI, computer vision and body-modelling based 3D body shapes and motion for various industries.

Though financial details are unavailable, TechCrunch has reported that the deal could be worth $50 million to $70 million.

Let’s take a look at the potential usage options.

Fashion: Body Lab’s SOMA Shape API enables prediction and measurement of 3D body shapes using a single image. So, this could be used by Amazon to develop custom apparel and better sizing recommendations.

Amazon could enable shoppers to virtually try out clothes using their selfies to reduce returns. Notably, a recent prime exclusive service called Amazon Wardrobe allows customers to buy everything they like and return what doesn’t fit. Naturally, Amazon could run the service cheaper if it manages to shrink returns.

We observe that Amazon shares have gained 27.6% year to date, underperforming the 49.3% rally of the industry it belongs to.

 

 

Amazon’s Echo Look device and Body Lab’s SOMA human-aware AI-based Mosh mobile app seems to be a good fit for each other. While Echo Look allows users to take photos and short videos as they try out different dresses and display them in their smartphones, Mosh can add 3D effects to a photo based on a person’s pose.

So, by integrating Mosh with Echo Look, Amazon could encourage people to shoot more photos and videos and build on its own record of size and fits in the process. That makes sense given Amazon is increasingly pushing its private level fashion brands in recent years.

Amazon.com, Inc. Net Income (TTM)

Gaming: As a retailer of gaming products, Amazon has been sprucing up its capabilities over the past few years. To this end, it has acquired companies like Twitch, Double Helix Games, CryEngine and most recently GameSparks.

The company has launched a free, cross-platform 3D game engine called Lumberyard that developers can use to make games, leveraging the compute and storage capabilities of AWS and the Twitch fan base. It also offers a managed service to deploy and manage game servers for multiplayer games called Gamelift.

Amazon has now the opportunity to useBody labs’ SOMA AI technology in these gaming endeavors. This in turn could boost AWS revenues by enabling it to host more gaming content. Body Lab’s technology could also be used to accelerate Amazon’s AR/VR endeavors, going forward.

Suddenly Very Acquisitive

So far this year, Amazon has already made the second-largest number of acquisitions since 1998 and we can easily expect more.

Amazon is gradually choosing the buy option over build, which, along with the other positives, ensures revenue generation in the right way without wasting any time in building its own infrastructure.

To Conclude

Amazon’s global margins are likely to be under pressure at least for a few years given that it continues to invest aggressively in fulfillment centers, TV shows and movies, AWS, acquisitions, expansion in India and what not.

Amazon has never hesitated to sacrifice margins to pursue its long-term objectives of bringing more customers under its umbrella and giving them reasons to stay. A huge cash balance and technological prowess boost the company’s remarkable risk-taking ability.

Zacks Rank and Stocks to Consider

Amazon has a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the broader technology sector include Micron Technology, Inc. (MU - Free Report) , Applied Materials, Inc. (AMAT - Free Report) and Jabil Inc. (JBL - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings per share growth rate for Micron, Applied Materials and Jabil is projected to be 10%, 17.1% and 12%, respectively.

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