Raymond James downgrades Amazon amid earnings challenges

In the United States, Raymond James has downgraded Amazon's stock from a strong buy to an outperform rating on April 21, 2025, citing concerns about near-term earnings pressures. Analyst Josh Beck highlighted various challenges impacting Amazon's financial performance, focusing particularly on headwinds from tariffs and macroeconomic uncertainties. The firm has also reduced its price target for Amazon's shares from $275 to $195, which indicates a 13% upside potential based on recent closing prices. This downgrade follows a concerning trend, as Amazon shares have declined over 5% during April and are down 21.3% year-to-date. Beck explained that factors such as rising EBIT risks and limited monetization progress contributed to the decision to lower the stock rating. While maintaining a positive outlook on Amazon's artificial intelligence prospects and long-term investments, he acknowledged the difficulty of upholding a strong buy rating in the current economic climate. The analyst specifically noted ongoing tariffs' impact on the advertising sector, where approximately 15% of Amazon's ads are tied to China. This exposure presents a significant risk given the broader implications for supply chain and logistics as well. The firm also signaled that approximately 30% of Amazon's online gross merchandise volume originates from China, further complicating the company's financial outlook. Investors are keenly awaiting Amazon's financial report, expected on May 1, which will shed light on the company's performance and provide more clarity regarding its revenue growth amidst these challenges. Overall, the downgrade reflects a cautious stance by Raymond James regarding Amazon's ability to navigate through these turbulent economic conditions while still capitalizing on potential technological advancements in the long run.