The two stocks are making dichotomous moves on the day with Amazon slumping and Honeywell surging, but the partnership in automation could prove profitable to both.
Both companies touched on the automation efforts in their respective earnings releases.
"We're working on improving the usability of tools," CFO Brian Olsavsky told analysts on Wednesday evening. "Our priorities in this space, that's certainly one of them, looking for ways to make smarter recommendations, addressing the needs of brands, automating activities, inventing new products."
The ambition feeds directly into Honeywell's Safety and Productivity Solutions division and its Intelligrated material handling program, which buoyed shares of the Charlotte-based company.
"The company's warehouse automation business saw double-digit organic growth with a backlog conversion fueled by e-commerce," Jim Cramer's Action Alerts PLUS team pointed out. "Remember, Amazon is a key customer of Honeywell's warehouse automation business, and increased investment by the retail/cloud-computing giant represents a tailwind for Honeywell."
Honeywell first mentioned Amazon as a key customer in mid-2018, noting significant headway in pushing forward Jeff Bezos' behemoth in its warehouse automation ambitions.
"Honeywell Intelligrated provided the material handling equipment design, installation and support for Amazon's new more than 0.5 million square foot distribution center north of Calgary," Honeywell CEO Darius Adamczyk said at the time. "Once it opens later this year, the facility will complement a larger network of Amazon fulfillment centers throughout Canada."
If that trend spreads across Amazon's U.S. distribution network, the tailwind could be substantial.
Adamczyk hinted at this in the company's earnings call already when asked if the backlog should sustain growth in Intelligrated.
"The short answer is absolutely," he responded. "If you recall, we put a lot of investments back in the 2017 and 2018 timeframe for R&D capability. We have a metrics-based offering. That's complete now, so we're very capable bidding on warehouses et cetera. So we continue to expect another very robust year in our Intelligrated business."
Amazon echoed the sentiment, with Olsavsky expecting increased investment in warehouses that could certainly be driven by a primary partner like Honeywell.
"In a lot of ways, 2018 was about banking the efficiencies of investments in people, warehouses, infrastructure, that we had put in place in 2016 and 2017," he explained. "I would expect those investments to increase relative to 2018, and we've reflected what we see so far in first quarter guidance."
So, while the stock moves on the day might not suggest much translation, the growth engines remain in tandem.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long HON, AMZN.