Amplitude (NASDAQ:AMPL) has been downgraded to a ‘Neutral’ rating from ‘Buy’ by Bank of America analysts, citing increased execution risk and a weaker-than-previously expected profitability outlook.
The analysts also reduced their price target to $8 from $10. Shares traded hands up 5% at about $6 on Friday.
The firm pointed to higher operating expenses tied to Amplitude’s expanded strategy involving Statsig, as well as rising AI inference-related costs, both of which are pressuring margins.
Bank of America said these factors are making it more difficult for the company to show a near-term path toward stronger profitability metrics, including Rule-of-40 performance.
The revised outlook now assumes a “Rule-of-19” profile by calendar 2027, combining expected revenue growth of about 12% with a free cash flow margin of 7.4%. This compares to higher-growth infrastructure software peers that the firm estimates at a Rule-of-36 level, reflecting both faster growth and stronger margins.
The bank also lowered its fiscal 2026 non-GAAP operating income forecast for Amplitude, citing reduced guidance and increased spending. The updated range now stands at $2.5 million to $6.5 million, down from a prior estimate of $7 million to $13 million.
While Bank of America acknowledged potential long-term upside from Amplitude’s partnership with Statsig, it said the strategy introduces near-term execution and churn risks.
The firm noted that clearer evidence of successful integration or faster acceleration in annual recurring revenue would be needed to turn more constructive on the stock.
The price target reduction reflects a lower valuation multiple of 2.2x EV-to-revenue, down from 2.7x, to account for higher uncertainty and weaker profitability expectations relative to peers.