Amazon Prime Day begins today: Here's what AMZN investors should know

Amazon.com kicked off its 12th annual Prime Day event on Tuesday, launching a four-day shopping extravaganza featuring millions of deals across more than 35 countries.

For the e-commerce giant, Prime Day has become one of the most important events on the retail calendar, driving a surge in online spending and offering insights into consumer behaviour.

This year's edition also carries added significance as it marks the first time since 2021 that the event is taking place in the second quarter.

The extended shopping event is also the first major retail test since Amazon introduced its artificial intelligence-powered shopping assistant, Alexa for Shopping, in May.

As a result, investors and analysts are paying close attention not only to sales figures but also to whether Amazon's sizeable investments in AI can translate into greater engagement and spending on its platform.

AI shopping tools face their first major test

Prime Day has evolved far beyond a promotional sales event.

Amazon is using this year's shopping festival to showcase Alexa for Shopping, which is designed to serve as a product discovery and deal-tracking assistant.

The feature offers personalised recommendations based on a shopper's browsing history, tracks product prices for up to a year, enables users to set price alerts, and can automatically place orders when target prices are reached.

The event is effectively becoming a litmus test for whether AI can improve shopping experiences and encourage customers to spend more.

Amazon has spent billions of dollars building the infrastructure required to power artificial intelligence while simultaneously investing heavily in developing its own AI products.

Shareholders are now looking for evidence that these investments can generate tangible returns.

Likely impact on sales and revenue

Bank of America said the new tool would play a crucial role "in protecting direct traffic for Amazon, as well as enabling higher conversion rates and driving incremental spend on the platform."

The brokerage estimates that the 96-hour event will generate $21.6 billion in goods sold, representing a 5% increase over last year.

JPMorgan analysts estimate the event could contribute between $7 billion and $8 billion in incremental global revenue during the second quarter.

They expect sales growth of 6% per day in third-party sales and 7% in first-party sales during the promotional period.

eMarketer estimates Amazon will generate $15.7 billion in US e-commerce sales during the event, up 7.1% from last year.

It also expects the company to capture 60.3% of all US e-commerce sales during the period, its highest Prime Day share since 2019.

Timing shift could boost seasonal spending

Amazon shifted Prime Day from its traditional July slot to late June this year, citing a crowded calendar that includes the FIFA World Cup and celebrations surrounding the 250th anniversary of US independence.

Analysts believe the earlier timing could prove advantageous.

eMarketer analyst Sky Canaves said an earlier Prime Day will help Amazon capture spending on outdoor and travel products, summer clothing, and seasonal purchases.

She added that consumers have become increasingly strategic in their shopping habits and often wait for major sales events to stock up on necessities and purchase larger-ticket items that they had previously delayed.

Prime Day's impact on online shopping is expected to be substantial.

According to Adobe's latest Prime Day forecast report, average daily online spending during the event is projected to be 84% higher than the average daily spending in June.

Adobe also expects consumers to spend more during this year's Prime Day than they did during Black Friday and Cyber Monday combined in 2025.

Prime Day to offer clues on Americans' financial health

Beyond sales figures, analysts say what consumers purchase this week may provide a clearer picture of the financial health of American households.

The event comes as inflation continues to squeeze budgets.

Consumer prices rose 4.2% in May, marking the fastest pace in three years, while higher fuel prices linked to conflict in the Middle East have added further pressure.

As a result, lower- and middle-income consumers are increasingly prioritising everyday necessities over discretionary purchases.

"People just don't have the cash right now," said William Stern, chief executive of small business lender Cardiff, in a Reuters report.

"Prime Day isn't going to be about buying big TVs or fun stuff this year. It's for buying toilet paper and garbage bags on sale. Families are literally waiting for these discounts just to buy regular everyday things because their bank accounts are empty."

Amazon itself has highlighted deals on groceries, household essentials, travel products, and school-related items, noting that fresh food and essential products are making up a larger share of Prime members' shopping baskets as the company expands its same-day delivery network.

Adobe Analytics expects strong demand for children's clothing, backpacks, lunch boxes, refrigerators, power tools, and vacuum cleaners.

It forecasts average discounts of 23% on apparel, 23% on electronics, and 19% on toys, largely unchanged from last year.

Amazon's competitors are once again seeking to capitalise on the shopping frenzy.

Walmart's seven-day sales event began on Monday, while Target's Circle Deal Days are running concurrently with Prime Day, turning the period into an industry-wide discount battle.

Yet analysts say retailers are increasingly fighting for the same value-conscious customer.

"Walmart and Target...aren't getting people to spend more overall, they're just fighting over the same person. People are just going to go to whichever store has the absolute cheapest price," Stern said.

For Amazon, the coming days may reveal not only whether consumers remain resilient but also whether artificial intelligence can become a meaningful driver of the future of online shopping.