Wall Street may not be paying attention to Amazon’s (NASDAQ: AMZN) upside up in the air: satellite broadband

Jeff Bezos has trailed Elon Musk in net worth for some time ($236 billion vs. $417 billion).

Bezos’ Amazon (NASDAQ: AMZN) also lags Musk’s SpaceX in providing satellite Internet service. SpaceX’s Starlink division generated $7.7 billion of revenue last year, soaring 83% from a year earlier, according to estimates from the consulting firm Quilty Space.

Meanwhile, Project Kuiper, Amazon’s satellite broadband service, has just two prototype satellites in the air. It was twice forced to postpone its premier launches of operational satellites last year. The company now says it expects to begin deploying its satellite constellation early this year and to roll out Internet service later in 2025. 

Kuiper plans a constellation of 3,232 satellites. It must have at least half of those in place by July 2026 to maintain the US government’s authorization of its plan. Amazon hopes to provide broadband service in underserved areas around the globe.

But getting all its satellites up in the air is no mean feat. The task is much easier for Starlink, which as a SpaceX subsidiary has easy access to SpaceX rockets to launch its satellites. Starlink now has more than 7,000 active satellites, compared to zero for Kuiper.

Amazon must rely on others for rockets

Kuiper is slated to use rockets from Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT), Airbus (CBOE: AIR), Bezos’s Blue Origin and even Musk’s SpaceX to get all its satellites in orbit.

“Amazon’s alarmingly high reliance on all-new launch vehicles poses the biggest impediment to getting Kuiper off the ground,” Quilty says. It maintains that Kuiper will need a deadline extension from the government.

When it announced the project in 2019, Amazon estimated it would cost $10 billion-plus. However, now it looks like the total could rise as high as $20 billion, analysts say. Companies need to invest huge sums in satellites up front before they provide much revenue.

All that spending could put a dent in Amazon’s earnings this year. But don’t underestimate Amazon’s ability to succeed in new markets, especially ones related to consumer products and technology. 

And Amazon Web Services, its cloud computing division, may provide a ready-made base of corporate customers for Kuiper.

“Kuiper’s not-so-secret strength stems from Amazon’s devices business, with ample experience in mass-producing consumer electronics, and AWS, which powers about a third of the Internet’s infrastructure,” Quilty says.

The author owns shares of Amazon.