Amazon.com Inc (NASDAQ:AMZN) is showing signs of stabilization across its retail and cloud businesses, analysts believe.
The stock may be entering a tactical buy zone, pointing to solid quarterly results, easing capacity constraints at AWS, and resilient demand in the face of tariff uncertainty.
UBS noted Amazon’s second-quarter guidance implies roughly 5% growth in gross merchandise value (GMV), excluding foreign exchange, a slowdown that likely reflects consumer price sensitivity following tariff shifts. But with estimates potentially bottoming out, the brokerage said it sees a tactical buying opportunity as e-commerce demand stabilizes and AWS capacity expansion opens the door for acceleration in the second half of 2025.
Bank of America echoed that view, calling Amazon “well positioned” to benefit from any trade-related optimism in the coming months.
“Uncertainties remain, but the stock is well positioned for any trade agreement optimism and second-half AWS acceleration on added capacity,” the firm wrote in a note raising its price objective to $230 from $225.
Amazon reported first-quarter revenue of $155.7 billion and operating profit of $18.4 billion, beating consensus estimates of $155.1 billion and $17.5 billion, respectively. International revenue drove the upside, even as unit growth slowed to 8% year-over-year from a strong holiday quarter.
AWS revenue growth came in line with Street expectations at 17%, though it fell short of some elevated hopes after Microsoft Azure’s recent acceleration. Excluding the leap-year effect, AWS’s sequential deceleration was just one percentage point.
Despite some investor concerns about trade policies, Bank of America said Amazon has not seen material impact from tariffs yet, aided by pre-buying inventory and the resilience of its third-party (3P) seller network. Low-priced essentials grew twice as fast as other U.S. unit sales and now make up one-third of total units, helping insulate the business from consumer pullback.
UBS also highlighted Amazon’s improving unit economics and noted that shipping cost growth of 3% year-over-year remains below unit growth, suggesting enhanced operational leverage. The firm maintained its Buy rating, lowering its price target slightly to $249 from $253 due to minor adjustments in free cash flow forecasts.
Both banks pointed to AWS as a key catalyst heading into the second half of the year. Management confirmed that cloud infrastructure constraints are easing, allowing Amazon to sell compute capacity as soon as it becomes available. UBS said this could enable AWS growth to reaccelerate, even as Azure pulls ahead in the short term due to enterprise AI demand.
However, risks remain. UBS flagged that Amazon’s second-quarter revenue and operating income outlook remain soft amid a challenging macroeconomic backdrop, while potential increases in capital expenditures could compress free cash flow. Bank of America similarly noted peak tariff uncertainty may weigh on third-quarter unit growth, which it currently forecasts to decelerate to 5% year-over-year.
Still, with e-commerce and cloud adoption rates both relatively early in their maturity—hovering near 20% and 15%, respectively—UBS sees long-term growth potential for both Amazon’s retail and AWS businesses to scale far beyond their current levels.
Shares of Amazon moved around 0.6% higher on Friday.