Amazon (NASDAQ:AMZN) remains firmly anchored by its cloud division, Amazon Web Services, which Jefferies analyst Brent Thill continues to call the company’s crown jewel. His note, issued ahead of Amazon’s Q1 2025 earnings on May 1, outlines both opportunity and caution.

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Thill trimmed his price target to $240 from $250, pointing to macroeconomic uncertainty and tariff pressures, particularly around Chinese imports. As a result, Jefferies reduced Amazon’s Q2 and full-year 2025 revenue forecasts by roughly $2 billion and $10 billion, respectively. The firm also expects earnings before interest and taxes to come in below consensus estimates for the same periods.

Despite the pressure, AWS continues to outperform other segments. The cloud unit posted $28.8 billion in Q4 2024 revenue, up 19% year over year, and delivered a 37% operating margin. For all of 2024, AWS revenue hit $107.6 billion, also up 19%.

Thill believes Amazon’s ads business is another area with meaningful upside. The company’s ad-supported Prime Video service and vast retail data remain underleveraged. He also sees Amazon’s recent share decline as a possible long-term buying opportunity.

This article first appeared on GuruFocus.