Key Highlights
- Amazon finalizes $11.6 billion purchase of Globalstar to expand its satellite operations
- Shares of AMZN climbed approximately 4% after the deal announcement
- The acquisition includes 24 active satellites, orders for 50+ additional units, and valuable L and S band spectrum rights
- Morgan Stanley’s Brian Nowak maintains Overweight rating on AMZN with $300 target price (roughly 20% potential gain)
- Investment may strain Amazon’s cash generation, given the company’s $200 billion capex forecast for 2026
Amazon has finalized its purchase of Globalstar in an approximately $11.6 billion transaction, designed to strengthen its satellite network ambitions and compete more aggressively with SpaceX’s Starlink service.
Shares of AMZN surged roughly 4% in response to the news.
This transaction provides Amazon with Globalstar’s fleet of 24 functioning satellites plus commitments for approximately 50 additional units. Crucially, the deal secures valuable L and S band spectrum licenses essential for direct-to-device (D2D) satellite communications.
D2D technology enables devices to communicate directly with satellites in low Earth orbit, eliminating reliance on traditional cellular infrastructure. Amazon has targeted this growing market segment, with full-scale deployment anticipated around 2028.
The acquisition also transfers Globalstar’s current partnership with Apple to Amazon, supporting Emergency SOS features, messaging capabilities, Roadside Assistance functions, and Find My services for iPhone 14 and later models, plus Apple Watch Ultra devices. Amazon has both extended and enhanced this agreement.
Currently, Amazon operates only 241 satellites. Under its 2020 FCC authorization, the company must deploy half of its 3,236-satellite network by July 30, 2026. Amazon has already requested additional time from the FCC.
Meanwhile, SpaceX maintains over 10,000 satellites in orbit and controls its own launch infrastructure. This launch capability difference represents Amazon’s most significant competitive challenge.
Morgan Stanley Endorses Strategic Acquisition
Morgan Stanley’s Brian Nowak identified five strategic advantages the Globalstar transaction brings to Amazon‘s satellite initiative.
He highlighted the spectrum licenses, enlarged satellite fleet, entry into the D2D market, Globalstar’s Band 53 terrestrial spectrum for potential warehouse automation and robotics applications, and the Apple partnership as significant benefits.
“We believe this acquisition provides important signal for investors that AMZN is committed to Leo/Space,” Nowak stated.
Nowak maintained his Overweight stance on AMZN while elevating his price target to $300, suggesting approximately 20% upside potential from present levels.
Wall Street consensus supports this view. Among 45 analysts tracking the stock, 42 recommend buying while 3 suggest holding. The consensus 12-month price target stands at $284.77, indicating about 14% potential upside.
Capital Spending Concerns Mount
This acquisition compounds Amazon’s already substantial 2026 investment plan. Management has projected $200 billion in capital expenditures for 2026, which may drive free cash flow into negative territory.
Should satellite investments accelerate through 2027, cash flow pressure could persist for multiple years.
Amazon has secured preliminary commercial agreements, including partnerships with airlines and telecommunications providers, as CEO Andy Jassy mentioned in his latest shareholder communication. However, the satellite business introduces greater uncertainty compared to Amazon’s established cloud computing and retail segments.
Amazon’s most recent satellite deployment brought its total operational satellites to 241, falling considerably short of the FCC’s midyear benchmark requirement.
