🐻 Bearish Takeaways

• B. Riley downgraded Applied Optoelectronics to Sell, citing that Amazon-related optimism may already be reflected in the stock price and describing 2026 revenue expectations as “lofty.” Valuation concerns remain a central reservation among some analysts.

• Wells Fargo cautioned that despite Amazon’s large addressable market in grocery, operational complexity and margin profiles suggest risks. The firm estimated a worst-case scenario of $2.5 to $3B in operating income dilution for every point of U.S. grocery share captured.

• Wedbush downgraded Instacart on concerns that Amazon’s expansion in same-day perishable grocery delivery increases competition, arguing it could erode Instacart’s market share as Amazon Prime becomes an even more attractive option for grocery shoppers.

• Certain analysts raised flags about near-term competition and valuation, advising caution as portions of Amazon’s prospective gains may be already priced in and as industry competition intensifies.

Taken together, Wall Street’s latest perspectives point to confidence in Amazon’s execution and secular growth, especially within AWS and new partnership channels, while also flagging competitive, operational, and valuation headwinds that investors should continue to monitor.

Do your thoughts align with the Bull or Bear Analysts? Perhaps you think there’s more to the story. Head to the Simply Wall St Community to discover more perspectives or begin writing your own Narrative!

• Amazon and Microsoft have voiced support for the Gain AI Act, new legislation focused on strengthening U.S. access to advanced AI chips as concerns grow about technology exports to China. If passed, this act could offer Amazon and Microsoft advantages in developing AI capabilities. Nvidia opposes the proposed measures, calling them unnecessary intervention.

• Amazon is intensifying efforts against illegal sports streaming by blocking unauthorized apps on its Fire TV sticks. This crackdown aims to protect content creators and shield users from risks like malware and fraud as the company works to ensure a safer viewing environment.

• Prime Video’s advertising reach continues to expand, now boasting 315 million monthly active ad-supported users globally. This milestone highlights Amazon’s significant audience for advertisers and underscores the platform’s broad influence in streaming media.

• The European Commission has decided to temporarily pause certain provisions of its AI regulatory framework following pressure from major industry players, including Amazon. This move comes as European lawmakers weigh the balance between fostering innovation and maintaining regulatory oversight.

• Fair Value has risen slightly from $287.57 to $293.03 per share, reflecting improved financial outlooks.

• Discount Rate has increased modestly from 8.33% to 8.61%, indicating higher perceived risk or cost of capital.

• Revenue Growth expectations have edged up from 11.27% to 11.46% annually, which suggests more optimism about top-line expansion.

• Net Profit Margin has improved marginally from 12.78% to 12.87%, signaling greater anticipated profitability.

• Future P/E Ratio has moved up slightly from 33.71x to 34.24x, which implies a higher expected valuation relative to future earnings.

A Narrative is more than just numbers. It is the story behind a company, connecting its business context, future estimates, and value in one place. Narratives on Simply Wall St make it easy for everyone to understand, track, and react to the factors that move a stock, updating automatically whenever new information arrives. They help you decide when to buy or sell by comparing fair value to the current price, and you can access them anytime in the Community page, used by millions of investors.

Explore the original Narrative for Amazon.com to discover the key drivers shaping its outlook, and stay ahead of the curve by following updates as they happen:

• See how Amazon’s leadership in cloud and AI is laying the foundation for high-margin, long-term growth.

• Track the impact of cost efficiencies, expanding logistics automation, and a growing Prime ecosystem on revenue and margins.

• Stay aware of the latest risks, from intensifying global competition to regulatory and cost pressures that could affect Amazon’s future value.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include AMZN.

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