Tariff Tsunami Leaves Amazon Stock (AMZN) Trading at a Discount
April 17, 2025
Amazon (AMZN), the global e-commerce and cloud giant, has seen its share price hit in recent weeks, mainly due to its layered exposure to the ongoing trade war and tariff schedule between the U.S and China. On one hand, suppliers are expected to pass on the added costs, meaning consumers could end up footing the bill. This raises concerns about a potential drop in global demand and possible bumps in Amazon’s growth trajectory. While the real impact may take time to materialize, several analysts have already trimmed their price targets and revised down both revenue and earnings growth estimates for the quarters ahead.
As a result, Amazon is now trading at its lowest valuation multiples in three years. In my view, long-term investors buying at these levels are getting a solid deal. I don’t believe tariffs will significantly disrupt the strong demand AWS continues to see. Given the underperformance we’ve seen so far in 2025, much of the perceived risk seems already priced in. For long-term investors, I rate Amazon as a Buy as this could be a great opportunity to pick up shares in a high-quality, growth-driven business while it’s trading at a discount.
The latest CPI (inflation report) shows inflation dropping by 0.1% in March on a seasonally adjusted basis after a 0.2% rise in February. The biggest reason for the decline was gas prices falling 6%, and overall energy prices were down by 2.4%.
Even though Amazon has been getting a lot of attention lately as a hyperscaler, at its core, it’s still a massive logistics and delivery company. So, when energy prices drop, that directly translates to lower logistics costs. In other words, Amazon’s shipping costs per order are likely trending down, directly boosting operating margins in its e-commerce division, which has historically had pretty thin margins.
On top of that, in a lower-inflation environment, consumers tend to have more purchasing power. If people feel like prices are stable, they’re more comfortable spending, and that’s great news for Amazon’s retail side. All in all, these are solid signs for the Seattle-based tech giant. If Amazon can deliver more goods at lower costs while customers are more eager to shop, that’s a win for shareholders.
The good news on the inflation front has helped offset some of the skepticism built in recent weeks due to rising trade tensions. Continuing its underperformance into 2025, Amazon has been one of the hardest-hit tech giants in the recent early-April selloff, dropping roughly 13% from Trump’s “Liberation Day” to April 8 — before shares started to rebound following news that U.S. tariffs (excluding those on China) would temporarily be paused.
While Amazon CEO Andy Jassy has taken a wait-and-see approach to how the tariff situation will unfold, he did note that sellers are likely to pass those costs on to customers in full. Still, he emphasized that there hasn’t been any meaningful change in consumer behavior so far.
More importantly, regarding AWS, Jassy highlighted that even though components come from China and various other regions, Amazon’s supply chain is now highly diversified and not reliant on any single country. Demand for AWS remains strong, and with AI-related growth accelerating, there’s been no sign of slowing down.
That said, AWS has become extremely sensitive to even minor growth and margin expansion fluctuations each quarter. Naturally, that means the recent dip in Amazon’s stock price has coincided with analysts lowering their estimates over the past month.
For instance, top-line growth for 2025 has been revised down by 0.4%, now expected to come in at 9.2% year-over-year. For 2026, the revision was even steeper, down 0.6%, with growth now expected at 10%. And for 2027, estimates were cut by 0.7%, projecting 9.6% growth. It’s still unclear whether the recent share price declines have fully priced in these lowered expectations, but for long-term investors, that’s something worth watching closely.
Right now, Amazon trades at a forward earnings multiple of 28.8x — the lowest it’s been in at least the past three years. This might be the cheapest multiple we’ve ever seen on Amazon stock.
Even if tariffs dent Amazon’s growth slightly, with analysts estimating less than a one-percentage-point hit over the next few years, the company is still going all-in on the future. Amazon plans to spend a colossal $100 billion in 2025 alone to expand its AI infrastructure and keep up with booming AWS demand. That kind of investment sets the stage for continued momentum in its highest-margin business, which is probably the most critical part of AMZN’s story right now.
Currently, Amazon is expected to maintain an EPS CAGR of 20.3% over the next three to five years, and that already factors in potential tariff headwinds. Based on its 2025 estimated P/E ratio, that gives us a PEG of 1.4x—and in my view, that’s more than fair for a business of this quality, with long-term growth firmly supported by secular AI tailwinds.
Even though twelve analysts have recently lowered their price targets on Amazon solely in April, the overall sentiment on Wall Street is still overwhelmingly bullish. Over the past three months, 45 out of 46 analysts have rated the stock a Buy, with just one suggesting a Hold. The average price target for AMZN stock is $256.19 — a solid 42% upside from current levels.
There’s still a lot of uncertainty about how the global economy will react to the ongoing trade war between the U.S. and China. The evolution of tariffs and the likely tit-for-tat responses already being seen could become a common occurrence.
However, analysts are already predicting a slowdown in Amazon’s growth over the next few years, which seems reflected in the share price weakness this year. With Amazon shares now trading at their lowest valuation multiples in several years, I believe investors buying in at this moment are likely to get a solid deal.
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