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On Wednesday, BMO Capital Markets adjusted its outlook on Amazon.com, Inc. (NASDAQ:AMZN) by reducing the price target to $235 from the previous $280, while keeping an Outperform rating on the shares. The revision was prompted by changes in market conditions and projections for the company’s performance. According to InvestingPro data, Amazon currently trades at $176.63, with analysts’ targets ranging from $200 to $306. The stock appears undervalued based on InvestingPro’s Fair Value analysis, despite trading at a P/E ratio of 31.1.
Brian J. Pitz of BMO Capital cited several factors influencing the new price target. He noted that while the demand for Amazon Web Services (AWS) remains strong, there has been a softening in demand during March. The analyst pointed to the volatile macroeconomic environment and diminished visibility for the second half of 2025 as key reasons for caution. The company maintains robust financials with revenue of $638 billion and an impressive gross profit margin of 48.85%. InvestingPro subscribers can access 8 additional key tips about Amazon’s financial health and growth prospects.
Pitz also mentioned the impact of supply constraints, which are beginning to ease, and the potential effects of China tariffs on Amazon’s customer options and pricing. These tariffs could lead to increased prices, affecting consumer behavior and the company’s gross merchandise volume (GMV) forecasts.
Despite these challenges, the analyst emphasized that AWS is still well-positioned to capitalize on the $5 trillion total addressable market (TAM) opportunity. He also recognized Amazon’s artificial intelligence and Multi-Channel Fulfillment (MCF) capabilities as factors that could mitigate some of the negative impacts on the company’s GMV.
In light of these considerations, BMO Capital has adjusted its growth estimates for AWS, bringing them down to 19% for the first quarter of 2025 and to 18% for the full year, from the previous estimates of 20% for both periods. The firm reiterates its Outperform rating but has recalibrated its expectations to align with the current business climate.
In other recent news, Amazon.com Inc has faced several noteworthy developments. Citizens JMP has adjusted its price target for Amazon shares, reducing it to $240 from $285, while maintaining a Market Outperform rating. This revision comes as Amazon is preparing to launch over 3,200 satellites as part of Project Kuiper, aiming to provide global internet coverage. The company faces a critical deadline to have at least half of these satellites in orbit by July 2026 to maintain its FCC (BME:FCC) clearance. Meanwhile, Cantor Fitzgerald has also revised its price target for Amazon, lowering it to $230 from $270, but continues to rate the stock as Overweight. Analysts from Cantor Fitzgerald highlight the potential for Amazon to gain market share due to its retail efficiency and broad selection, despite current economic challenges. Additionally, Amazon Web Services (AWS) experienced a network interruption, affecting services on cryptocurrency exchanges like Binance and KuCoin. This incident has sparked discussions on the risks of centralized cloud infrastructure and the growing importance of decentralized computing.
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