SEATTLE, March 23, 2026, 09:55 (PDT)
Amazon.com jumped 3.2% to $211.85 on Monday, after reports surfaced that the company is working on a new AI-focused smartphone—internally dubbed “Transformer”—marking a return to a segment it left over ten years ago. Shares climbed as Wall Street staged a broader rebound. Reuters
Amazon’s push here is significant. After years spent pushing Alexa far beyond its smart-speaker roots, the company hopes to embed its AI assistant into daily life. A phone—or even a slimmer, secondary device—could plug Alexa straight into shopping, streaming, and food ordering, every hour of the day.
At the same time, Amazon is pushing to justify its $200 billion capital-spending blueprint for 2026, much of it earmarked for AI infrastructure. Last week, Chief Executive Andy Jassy argued that AI could eventually push AWS’s revenue to $600 billion a year. He emphasized that the current spending isn’t just a bet that “AI is going to be big.” Reuters
Amazon is working on a device called Transformer inside its devices and services division, Reuters said Friday, citing four sources familiar with the project. According to those people, the device is designed to integrate with Alexa and streamline Amazon shopping and Prime services, though it could still get scrapped if strategic or financial priorities change. Amazon wouldn’t comment.
Amazon’s ZeroOne team, which is about a year old and headed by ex-Microsoft exec J Allard, is developing an AI-driven interface that would let users handle tasks by entering prompts, skipping the need to download individual apps from app stores, according to Reuters. The group reportedly took cues from pared-down gadgets like the Light Phone.
Bullish analyst calls on the stock lately have steered clear of hardware. On Monday, TD Cowen’s John Blackledge kept his Buy rating and maintained the $300 price target, emphasizing “structural tailwinds in artificial intelligence, Ads momentum, and margin expansion.” Jefferies’ Brent Thill, in a Sunday note, argued Amazon shares are “mispriced, not broken.” TipRanks
Amazon is looking at re-entering a space dominated by Apple and Samsung, which together held roughly 40% of worldwide smartphone sales last year, Counterpoint Research figures cited by Reuters show. “A compelling reason to switch phones” will be crucial, says R.W. Baird analyst Colin Sebastian, pointing to the strong loyalty users have for their current app stores. Reuters
Amazon’s flop with the Fire Phone is well documented. The device limped along for just 14 months; a paltry app offering and that unusual multi-camera 3D display led to the price collapsing from $649 to $159. Amazon ended up recording a $170 million write-down on unsold units. For Transformer, Reuters reported it couldn’t pin down either a price tag or a launch window.
It’s also an ugly moment. Back in February, IDC projected a 12.9% plunge in global smartphone shipments for 2026—the sharpest drop ever, blamed on rising memory-chip prices pushing up phone costs. Nabila Popal, who leads research for IDC’s Mobile Phone Tracker, didn’t mince words, calling it a “structural reset of the entire market.” In the same Reuters piece on Amazon, IDC’s Francisco Jeronimo saw a sliver of a chance for the company, but cautioned, “the window of opportunity is tiny.” Reuters
So, Transformer shapes up as more of a distribution play for Alexa and Amazon’s broader AI offerings, rather than a direct bid to sell handsets. It’s possible the device winds up as a mainstream phone, maybe just a pared-back sidekick, or maybe it doesn’t launch. The real question is whether Amazon manages to make its AI software something people actually carry around all day.
