Raymond James downgraded Amazon.com (NASDAQ: AMZN) from Strong Buy to Outperform and cut its price target to $195 from $275, the lowest among major Wall Street firms. The firm cited concerns over elevated investment intensity, margin headwinds, and limited near-term monetization progress across key initiatives. As a result, the company’s shares fell nearly 3% intraday today.
The firm reevaluated Amazon’s investment cycle and concluded that the market is underestimating EBIT pressures for 2025 and 2026. As a result, Raymond James reduced its operating income estimates by $6 billion for 2025 and $12 billion for 2026, citing weaker expectations for advertising and AWS, as well as ongoing margin compression in Amazon’s first-party retail business.
The downgrade also reflects growing macroeconomic and geopolitical risks, including new U.S. tariffs that may impact Amazon’s China-linked operations. The firm estimates roughly 30% of Amazon’s online gross merchandise volume (GMV) and 15% of its ad revenue are tied to China, with China-sourced first-party goods expected to reduce gross margins by around 200 basis points.
Logistics challenges, particularly in rural U.S. markets, are another concern as Amazon.com (NASDAQ: AMZN) scales its internal delivery network following UPS’s exit. Capital-intensive efforts to diversify supply chains and reduce dependence on China are also expected to weigh on near-term profitability.
Raymond James remains optimistic about Amazon’s long-term prospects in artificial intelligence, but it emphasized that monetization is still in the early stages and resource-intensive. The firm’s AI revenue run-rate is growing rapidly but remains supply-constrained and front-loaded with capital investment.
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David Kirakosyan is a seasoned financial journalist with nearly a decade of hands-on experience in covering the U.S. stock markets. Since 2016, he has written thousands of equity news articles, detailed market analyses, and investment insights for trusted platforms like Benzinga, Investing.com, and StreetInsider. David holds a Master of Science in Finance and is a Level 2 CFA® candidate, reflecting his deep commitment to financial expertise and ethical standards. His reporting combines real-world market experience with a strong academic foundation, helping readers make informed decisions backed by reliable information. Read Full Bio
