Analyst Highlights 'Alarm Bells' for Amazon.com (AMZN) Retail and Cloud Business Amid Tariffs

We recently published a list of 10 AI Stocks Investors Are Monitoring After Tariff Shock. In this article, we are going to take a look at where Amazon.com Inc (NASDAQ:AMZN) stands against other AI stocks investors are monitoring after tariff shock.

The tariff wars and a potential slowdown in AI spending threw water on investors’ AI trade plans and outlook. However, many analysts believe the broader outlook of the industry is still strong.

Ben Bajarin, Creative Strategies CEO, in a latest program on CNBC explained why he is still bullish on the Jensen Huang-led AI giant:

“I think when you look at the technology roadmap … in terms of what they’re doing with Grace Blackwell and Blackwell systems going forward, it’s going to be very, very hard for others to compete. I think they were extremely bullish about how much of the industry—not just the traditional, you know, cloud servers but AI factories and this entirely new infrastructure—and how it is being kind of redeveloped for the AI era. Like, it’s not being built on other things. And so I think when you look at the ecosystem that’s grown around them, they’re deeply entrenched. It doesn’t have any sign of that changing.”

Bajarin said that he sensed “frustration” in Jensen Huang’s tone as the executive feels Wall Street is not modeling the growth potential his company’s AI products truely have.

“And he seems to think that nobody is modeling that in or really understands it. So there’s the—we kind of have a sense of what they’ll sell just product-wise here in 2025, which is where I agree with you. Hard to surprise to the upside to move the stock, but I think he is signaling people don’t understand the magnitude of this opportunity. And I think that’s worth unpacking because there is a lot of growth ahead.”

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Amazon.com Inc (NASDAQ:AMZN)

Number of Hedge Fund Investors: 286

Ron Westfall from The Futurum Group said in a latest program on Schwab Network that Amazon.com Inc (NASDAQ:AMZN) will see a negative effect of tariffs and its AWS business will also see an impact amid a global slowdown in spending:

“I think there are some alarm bells here, and a lot of it relates to the macroeconomic factors that we’re seeing. For example, Delta and Walmart executives have indicated that they’re seeing some soft spending, particularly on the consumer side, and that can impact Amazon. And that’s linking to the guidance that they provided for Q1 of ’25. Instead of the analyst expectations of $158 billion being fulfilled, they are projecting in the range of $151 billion to $155 billion.

So what’s behind this soft spending trend? I think a lot of it is that there’s still uncertainty about inflation—will it remain tame? And also tariffs, you know, the big headline grabber right now. And we’re seeing, for example, the proposals to implement 10% tariffs to 25% tariffs on China, and this would impact Amazon more than other tech companies because, for instance, 25% of Amazon sales are of products that are made in China, and up to a third of products that are sold on Amazon are through third-party resellers using made-in-China products.

So you can buy all these factors together, and it’s also impacting AWS, their cloud computing unit, and the fact that enterprise spending is also being impacted by these same factors. We can see a dial-back that’s across the board, and thus dampen Amazon’s stock expectations in the very near term.”

Harding Loevner Global Developed Markets Equity Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:

“During the quarter, we benefited from strong stocks within the Communication Services and Consumer Discretionary sectors. In Consumer Discretionary, Amazon.com, Inc. (NASDAQ:AMZN) reported strong third-quarter results. Revenue increased by double digits, led by growth in advertising and Al products, while the company’s operating margins also hit an all-time high of 11%. The key reasons for the higher margins were that its international e-commerce operations turned profitable, and there was faster growth in its high-margin cloud-computing business.”

Overall, AMZN ranks 1st on our list of AI stocks investors are monitoring after tariff shock. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.