Amazon.com Inc (NASDAQ:AMZN) has recently been under scrutiny from analysts regarding the potential impact of tariffs on its retail and cloud business. According to a report by Yahoo Finance, Ron Westfall from The Futurum Group stated in a recent program on Schwab Network that Amazon will see a negative effect of tariffs and its AWS business will also see an impact amid a global slowdown in spending.
The tariff wars and a potential slowdown in AI spending have thrown water on investors’ AI trade plans and outlook. However, many analysts believe the broader outlook of the industry is still strong. Ben Bajarin, Creative Strategies CEO, in a latest program on CNBC explained why he is still bullish on the Jensen Huang-led AI giant: “I think when you look at the technology roadmap … in terms of what they’re doing with Grace Blackwell and Blackwell systems going forward, it’s going to be very, very hard for others to compete. I think they were extremely bullish about how much of the industry—not just the traditional, you know, cloud servers but AI factories and this entirely new infrastructure—and how it is being kind of redeveloped for the AI era. Like, it’s not being built on other things. And so I think when you look at the ecosystem that’s grown around them, they’re deeply entrenched. It doesn’t have any sign of that changing.”
Bajarin also mentioned that he sensed “frustration” in Jensen Huang’s tone as the executive feels Wall Street is not modeling the growth potential his company’s AI products truly have. “And he seems to think that nobody is modeling that in or really understands it. So there’s the—we kind of have a sense of what they’ll sell just product-wise here in 2025, which is where I agree with you. Hard to surprise to the upside to move the stock, but I think he is signaling people don’t understand the magnitude of this opportunity. And I think that’s worth unpacking because there is a lot of growth ahead,” he added.
Meanwhile, Westfall highlighted some alarm bells for Amazon, citing macroeconomic factors such as soft spending on the consumer side, which can impact Amazon. He linked this to the guidance provided by Amazon for Q1 of ’25, which was lower than analyst expectations. Instead of the analyst expectations of $158 billion being fulfilled, Amazon is projecting in the range of $151 billion to $155 billion.
In its Q4 2024 investor letter, Harding Loevner Global Developed Markets Equity Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN): “During the quarter, we benefited from strong stocks within the Communication Services and Consumer Discretionary sectors. In Consumer Discretionary, Amazon.com, Inc. (NASDAQ:AMZN) reported strong third-quarter results. Revenue increased by double digits, led by growth in advertising and AI products, while the company’s operating margins also hit an all-time high of 11%. The key reasons for the higher margins were that its international e-commerce operations turned profitable, and there was faster growth in its high-margin cloud-computing business.”
As reported by Yahoo Finance, Amazon currently ranks 1st on the list of AI stocks investors are monitoring after tariff shock. While the company has potential, some analysts believe that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. With 286 hedge fund investors, Amazon is a stock that many investors are keeping a close eye on.
In conclusion, Amazon.com Inc (NASDAQ:AMZN) is facing potential challenges due to tariffs and a global slowdown in spending. However, many analysts remain bullish on the company’s long-term prospects, citing its strong technology roadmap and growing ecosystem. As the AI industry continues to evolve, it will be interesting to see how Amazon navigates these challenges and capitalizes on new opportunities.
According to Yahoo Finance, investors and analysts alike will be closely monitoring Amazon’s performance in the coming quarters to gauge the impact of tariffs and the company’s ability to adapt to changing market conditions. With its strong track record of innovation and growth, Amazon is likely to remain a key player in the AI industry for years to come.
Amazon is a company that has consistently demonstrated its ability to innovate and disrupt various industries. As reported by Yahoo Finance, the company’s focus on AI and cloud computing has been a key driver of its growth, and it is likely that this trend will continue in the future.
Sources:
Yahoo Finance
The Futurum Group
CNBC
Schwab Network
Insider Monkey
Harding Loevner Global Developed Markets Equity Strategy
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