E-commerce Giant’s Shares Slip Amid Concerns Over Profit Margins
Amazon’s stock took a hit in early trading on Monday, following a rare downgrade by a prominent analyst who expressed concerns over the company’s profit margins in the coming year. Despite the cloud computing business’s expected growth, the analyst believes it won’t be enough to offset the decline.
The analyst, Ken Gawrelski of Wells Fargo Securities, cut his rating on the stock from “overweight” to “equal weight” and slashed his price target from $225 to $183, one of the lowest on the Street. Amazon’s shares fell 1.4% to $184 before the market opened.
While the company’s stock has risen 23% this year, outperforming the Nasdaq 100 Index, Gawrelski warned that factors such as pressure on operating income and limited visibility into future earnings revisions could cap margin expansion in the first half of 2025.
Amazon’s cloud computing arm, Amazon Web Services (AWS), is expected to drive long-term growth, particularly with the increasing adoption of artificial intelligence. However, near-term concerns over the company’s AI-related investments have raised eyebrows.
Despite the downgrade, Amazon remains one of the most popular stocks on Wall Street, with nearly 94% of analysts holding a “buy” or equivalent rating. The average analyst price target stands at around $219, representing an upside of about 18% over the next 12 months.
Leave a Reply