Amazon stock falls as Raymond James downgrades shares, citing tariff headwinds and ‘limite
April 21, 2025
Amazon (AMZN) stock fell as much as 4% in early trading Monday after Raymond James (RJF) downgraded shares to Overperform from a Strong Buy.
Analyst Josh Beck cited headwinds from President Donald Trump’s recently-enacted tariffs and risks related to Amazon’s hefty capital investments — the company is set to spend more than $100 billion in the 2025 fiscal year as it goes all-in on artificial intelligence.
Beck lowered his price target on Amazon stock to $195 from $275. The analyst also trimmed his estimates for Amazon earnings before interest and taxes, or EBIT, to $73 billion from $79 billion for the 2025 fiscal year. He cut his EBIT estimate for 2026 to $86 billion from $97 billion.
Beck is more bearish than Wall Street analysts at large, who see Amazon EBIT hitting $80 billion in 2025 and $98 billion in 2026, according to consensus estimates compiled by Raymond James.
“We take a fresh look at the AMZN investment cycle (supply chain, logistics, AI, other bets) and based on an uneven macro/tariff and steepening investment intensity, walk away with a bias that the Street is underestimating EBIT pressures in 2025-26,” he said in a note to investors early Monday.
Trump rocked global markets by announcing steep “reciprocal” tariffs on key US trading partners this month and enacting a 10% tariff on all global imports on April 5. His reciprocal tariffs — initially set to take effect April 9 — were paused for 90 days, with the exception of a 145% duty on Chinese imports.
The move sent Big Tech stocks spiraling, with the so-called “Magnificent Seven” firms, including Amazon, shedding $2 trillion from their cumulative market capitalizations in the immediate aftermath of the reciprocal tariff announcement, before the three-month pause.
Trump’s trade war with China continued to escalate Monday as tech stocks dropped across the board.
Apple (AAPL), Microsoft (MSFT) and Google (GOOG) fell in the 2% range, while Meta (META) fell more than 3% and Nvidia (NVDA) sank 5%.
Beck estimated that 30% of Amazon’s gross merchandise value — the total value of products sold on its platform — come from China, led by electronics, toys, furniture, apparel and auto parts.
He said that, according to his analysis, China-based advertisers accounted for 14% of total spending on Amazon advertising in 2024, making it more exposed to China than its competitors. Chinese advertisers account for 11% and 6% of total ad spending on Meta (META) and Google (GOOG), respectively, Beck wrote.
The tariff-related headwinds come as Amazon ramps up spending on AI.
CEO Andy Jassy said in February that the vast majority of this year’s $100 billion capital investments from the tech giant will go toward building out its artificial intelligence capacity for its cloud segment, Amazon Web Services (AWS).
Amazon is by far the biggest spender of so-called Big Tech “hyperscalers” — a group of megacap cloud and e-commerce firms that also includes Microsoft, Google, and Meta.
Beck added as a caveat: “To be clear, we remain constructive on AI prospects/long-term investments, but with rising EBIT risk/limited monetization progress it is more challenging for us to stick with our Strong Buy rating.”
Beck anticipated generative AI revenue for Amazon Web Services will rise 80% to as much as $5 billion in 2025 — still just a fraction of its triple-digit capital investments in the technology.
“Improving monetization momentum would make us more constructive, while higher than expected investments could make us more cautious,” he wrote.
Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.
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