Wall Street might still be underestimating the risk tariffs pose to Amazon.com's earnings, even though the tech giant's stock has already dropped 21% year-to-date, an analyst said Monday. Raymond James analyst Josh Beck downgraded Amazon to an outperform call from a strong buy rating and cut his price target to 195 from 275.
Beck on Monday wrote that after analyzing Amazon's investment plans, Raymond James analysts "walk away with a bias that the Street is underestimating EBIT (earnings before interest and taxes) pressures in 2025-2026 and thus downgrade from Strong Buy to Outperform as we look for greater investment/return-on-investment visibility."
Those pressures include an uneven macro environment and tariffs, Beck wrote. President Donald Trump has imposed 145% tariffs on imports from China. About 30% of Amazon gross merchandise value is "China-linked," Beck estimates. Chinese sellers also account for about 15% of advertising purchases on Amazon's website, according to the note.
Meanwhile, Amazon is planning significant spending on AI cloud data centers, expanding its logistics capabilities and other initiatives such as its Project Kuiper satellite internet and Zoox autonomous vehicles.
"Our 'deep investment cycle' thesis recognizes the positive long-term potential from investing in supply chain, logistics, AI, AVs and broadband satellite, however, we lack sufficient visibility in the investment levels/ROI in 2025/2026 and thus recommend an Outperform rating," Beck wrote. "Improving monetization momentum would
make us more constructive, while higher than expected investments could make us more cautious."
On the stock market today, Amazon stock fell 3% to close at 167.32.
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Amazon Stock: Down 24% This Year
The 195 price target set by Beck is the lowest among analysts tracked by FactSet. But Raymond James is among several firms that have lowered their estimates for Amazon in recent weeks.
About 93% of the 75 Wall Street analysts following the stock rate it a buy, according to FactSet. But the average one-year price target analysts have calculated for Amazon stock has declined to 252.03, down 6% from February.
The current slump for Amazon stock began with its fourth-quarter results in early February, which beat earnings estimates but included a lower-than-expected sales forecast for Q1. Shares have tumbled 31% from a record high of 242.52 reached Feb. 4 and are down 24% year-to-date.
Further, Amazon fell below its 200-day moving average late last month and remains well below the long-term trendline.
Amazon will report its first quarter earnings on May 1.
