Alexa Is the Key to the Future of Amazon.com, Inc. (AMZN)

Amazon.com, Inc. (Nasdaq: AMZN) has one of the hottest gift ideas of the 2017 holiday season with its Echo devices powered by home assistant Alexa. But Amazon investors expect Alexa devices to be more than just a novelty, and RBC analyst Mark Mahaney says Alexa will drive major revenue growth for Amazon in coming years.

According to a new survey by RBC, selling Alexa-enabled devices is just the tip of the iceberg for Amazon. The true value for investors is having the Amazon ecosystem integrated into users’ homes.

[See: 7 of the Best Stocks to Buy for 2018.]

“The win, by the way, for Amazon probably is not just selling devices … 40 percent of people who own these devices shop more with Amazon,” Mahaney said on CNBC Thursday.

“With tens of millions of users and 20,000-plus skills, we see Alexa’s value prop as becoming increasingly powerful as awareness and ownership ramp,” Mahaney wrote in a note to clients.

Amazon’s aggressive marketing of Alexa appears to have paid off. RBC found that awareness of Alexa has increased from 77 percent of consumers to 89 percent of consumers in the past nine months. Ownership of Alexa devices is also up 2 percent to 15 percent of households surveyed.

Mahaney says Amazon could generate up to $11 billion in annual sales from Alexa by 2020. The forecast includes both device sales and incremental e-commerce sales.

Mahaney says Amazon’s family of Echo devices and the Alphabet ( GOOG, GOOGL) family of Google Home devices represent the “voicification” of the internet, one of the hottest trends in the tech world in coming years. Mahaney expects a seismic shift in the way users interact with the internet, with voice commands replacing keyboards and touch screens.

[See: 7 Stocks Primed for an Amazon.com Buyout.]

Earlier this year, Loup Ventures found that Amazon has a early market share lead in the virtual assistant space. Loup reported the Amazon Echo controls about 70 percent of the smart speaker market, while Google Home accounts for 24 percent. A potential wildcard in the space could be the Apple ( AAPL) HomePod. The Siri-powered HomePod is expected to be available in early 2018.

By now, Amazon investors are used to the company beating competitors to new markets and opening up a commanding lead, and the home assistant market is no exception. Even after a 57 percent gain for Amazon stock in 2017, RBC maintains an “outperform” rating and $1,200 price target for AMZN stock.

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Alexa Is the Key to the Future of Amazon.com, Inc. (AMZN) originally appeared on usnews.com

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