Amazon.com Inc (NASDAQ:AMZN) faces challenges in 2025 but remains backed by Bank of America analysts who repeated their ‘Buy’ rating on the eCommerce platform while trimming their price objective to $225 from $235.
Shares of Amazon traded modestly higher on Wednesday at $171, but are down 22% in the year to date.
The analysts’ update comes as US president Donald Trump has announced a series of sweeping global tariffs, including a 104% tariff on Chinese imports.
“While Amazon sales seemingly felt little impact from 2018 China tariffs, the widespread and much larger 2025 global tariffs are a potential new ballgame for supply chains and costs,” analysts wrote.
“We think Amazon's robust 3P supplier network and large scale with 1P suppliers can help with inventory and product costs but, as tariffs stand today, we expect material cost inflation in Amazon's marketplace.”
Bank of America has modestly lowered its estimates across the board, now projecting 2025 earnings per share of $5.76, down from $6.16.
Gross profit is revised down by $10 billion and GAAP operating profit by $5 billion.
The bank now expects slightly lower gross merchandise volume, with lower unit volumes being partially offset by higher average selling prices.
Ad revenue from third-party sellers and AWS growth could also take a minor hit due to softer business confidence.
Amid these near-term headwinds, the analysts highlighted Amazon’s strengths: a dominant third-party marketplace that accounts for 60% of unit sales, operational efficiencies from automation and headcount reductions, and a cost structure that supports price competitiveness. The essentials category is also gaining ground, providing resilience in a price-sensitive environment.
Amazon’s cloud computing arm AWS remains a bright spot with CEO Andy Jassy commenting that cloud demand is “insatiable,” Bank of America added.
“Amazon's AWS business should see limited tariff impact, though a broader economic slowdown is a risk to IT spend,” they noted.
They concluded: “Amazon is likely to gain share during this tariff disruption cycle and supply chains will stabilize, but given near-term retail sector uncertainty, lower estimates, and comp multiple compression, we lower our price objective to $225.”