The stock of Amazon (AMZN) is down about 5% after Raymond James Financial (RJF) downgraded the e-commerce giant, saying the company is likely to be hurt by U.S. tariffs on Chinese goods.
Josh Beck, a top five-star analyst, lowered his rating on AMZN stock to outperform from strong Buy previously. He also cut his price target on the stock to $195 from $275, a reduction of 29%. It is a rare downgrade for Amazon, whose stock is typically upgraded by Wall Street investment banks such as Raymond James.
“To be clear, we remain constructive on AI prospects/long-term investments, but with rising EBIT [earnings before interest and taxes] risk/limited monetization progress it is more challenging for us to stick with our Strong Buy rating,” wrote Beck in a note to clients.
China Factor
Chinese goods exported to the U.S. now face tariffs of up to 145%. The Trump administration is also pressuring more than 70 nations to bar China from shipping goods through their countries to the American market. The tariffs and trade tensions could cause significant headwinds for Amazon moving forward, says Raymond James.
About 30% of Amazon’s merchandise is sourced from China, including electronics, toys, and apparel, says analyst Beck. He calculates that Amazon faces a hit of about 10% to its gross margins and a 2% drag on margins overall because of the U.S. import tariffs that have been applied to Chinese goods.
Beck also notes that China-based advertisers spent $8 billion marketing themselves and their products on Amazon’s e-commerce platform in 2024, accounting for 14% of total advertising revenue for the company last year. Those advertising dollars are now at risk, says Raymond James. AMZN stock has fallen 24% so far this year.
Is AMZN Stock a Buy?
The stock of Amazon has a consensus Strong Buy rating among 46 Wall Street analysts. That rating is based on 45 Buy and one Hold recommendations issued in the last three months. The average price target on AMZN stock of $251.79 implies 50.62% upside from current levels.
