Amazon Faces Economic Challenges Amid AI Growth
Amazon (NASDAQ: AMZN) is navigating mixed economic pressures, including rising tariffs on goods primarily sourced from China, which could impact its second-quarter earnings set to be reported on July 31. The U.S. recently imposed tariffs of at least 30% on Chinese goods, raising concerns for the 62% of unit sales contributed by third-party merchants. However, the company is positioning itself for growth through its Amazon Web Services (AWS) segment and expanding digital advertising, both significantly benefiting from the increasing demand for AI.
In the first quarter, Amazon reported a 9% year-over-year increase in net sales to $155.7 billion, with AWS controlling 32% of the cloud market and generating 19% of its total revenue. Analysts remain overwhelmingly positive, with 94% of 70 analysts rating the stock a “buy” and an average price target of $242, suggesting an 8% upside.
Moreover, Morgan Stanley recently increased its price target to $300, indicating a potential 33% upside, citing manageable tariffs and strong cloud growth. Despite the current economic uncertainties, Amazon’s diverse business segments show resilience, reinforcing Wall Street’s bullish outlook.
