Amazon Stock Gets a Downgrade as Tariff Worries Weigh on Its Shares

Amazon (AMZN) shares dropped Monday as brokerage Raymond James downgraded the e-commerce giant’s stock.

Shares of Amazon were recently off 4%, outpacing broad declines in US stocks. (Read Investopedia’s coverage of today’s trading here.) Tariff-related uncertainty weighed on the major indexes, and Raymond James analysts in a Monday note said that Wall Street is underestimating how much Amazon’s earnings may be pressured by tariffs and its investments in rural deliveries.

The analysts replaced their “strong buy” rating with an “outperform” rating, and cut their price target nearly 30%. The new target—$195—is more than 20% lower than the roughly $248 average price target among analysts who cover Amazon and were polled by VisibleAlpha.

“We remain constructive on AI prospects/long-term investments, but with rising [earnings before interest and taxes] risk/limited monetization progress it is more challenging for us to stick with our Strong Buy rating,” the note said.

Raymond James analysts said they prefer Meta Platforms (META) (which they said has a “known China risk and a clear AI product cycle”), Uber Technologies (UBER) (due to “fading” autonomous vehicle worries), and MercadoLibre (MELI) (because of Latin America exposure and “cohort profit drivers”).

Amazon may make less profit selling items from China, which account for about 30% of gross merchandise value on its platform, according to Raymond James’ estimate. Ad revenue may also suffer as U.S. and China slap import taxes on one another’s products and tensions rise, the analysts said. The online retailer’s domestic shipping strategy also presents a headwind. The company is spending $15 billion on warehouses in the rural U.S. to serve communities where UPS has cut back, the analysts said.

Bank of America Securities analysts maintained their “buy” rating, while acknowledging tariffs may affect Amazon’s business. The bank gave Amazon a $225 price target Sunday.

Amazon reports fiscal first-quarter earnings on May 1.