Amazon.com, Inc. (AMZN) built an empire from books to the cloud, redefining retail along the way. But even empires feel pressure. The stock is down 21% over the past three months as trade tensions have heated up. 

President Trump’s tariffs have slammed Amazon’s third-party sellers, slicing into profits. Now, with Prime Day 2025 around the corner, many sellers are tapping the brakes. Many of those who once flooded Prime Day with deals are pulling back hard, trying to protect razor-thin margins. 

Prime Day, Amazon’s crown jewel of retail events, is all about deep discounts and big volume, but those same discounts slash merchant profits even on a good day. Throw in sky-high tariffs, and the math just does not add up for many sellers anymore. Since Amazon leans heavily on China-made goods, higher costs could mean fewer deals, fewer sales, and a little less sparkle around Prime Day.

Meanwhile, with AMZN earnings due out after the close this Thursday, May 1, Amazon just announced a hefty $4 billion investment in small-town deliveries.

With sellers eyeing the exits and spending on the upswing, could it be time for investors to rethink whether AMZN stock is still a rock-solid buy?

About Amazon Stock

Washington-based Amazon.com, Inc. (AMZN), founded in 1994 by Jeff Bezos, has evolved into a $1.98 trillion tech empire. It dominates U.S. e-commerce with a 38% share, while Amazon Web Services (AWS) drives global cloud infrastructure. From Prime Video to healthcare, Amazon continues to reshape industries.

With a decade-long stock surge of 788%, AMZN stock is a mega-cap force redefining the digital age. However, 2025 has not been kind to Amazon. The stock is down 15.9% on a YTD basis and nearly 24% below its February peak of $242.52, bruised by weak guidance. It topped out just before Q4 earnings and has not touched those heights since.

With expectations low ahead of this week's earnings, some bargain-hunting investors are looking for a classic buy-the-dip moment before the next Prime-powered breakout.

Now trading at 30.17 times forward adjusted earnings and 3.14 times forward sales, AMZN is valued at a discount to its own five-year average multiples - a rare markdown for a tech titan. It could be the calm before the post-earnings surge, and a window for bargain hunters to act.

Amazon Tops Q4 Earnings Forecasts

Amazon reported stronger-than-anticipated Q4 earnings results on Feb. 6, but the stock fell as investors responded to weak guidance. Revenues rose 10% year over year to $187.8 billion, while its adjusted EPS almost doubled annually to $1.86, beating forecasts by 22.4%. The engine behind this momentum was streamlined operations and rising margins across segments.

Revenue at AWS, Amazon’s cloud cornerstone, climbed 19% to $28.8 billion, while its digital advertising business flexed at $17.3 billion, up 18%. Free cash flow ballooned to $38.2 billion, enabling aggressive plays in AI and acquisitions. With $78.8 billion in cash and cash equivalents as of Dec. 31, 2024, Amazon’s pivot to regional fulfillment sharpened its logistics blade - cutting costs, speeding deliveries, and cementing retail dominance. 

But shares of the e-commerce giant dipped 4.1% on Feb. 7, spooked by tempered Q1 guidance and AWS growth concerns. For this week's report, management projects Q1 revenue between $151 billion and $155.5 billion, factoring in a $2.1 billion forex hit. Operating income is expected to land between $14 billion and $18 billion.

Analysts tracking Amazon expect $155.1 billion in revenue, while Q1 EPS is projected to surge by 19.5% year over year to $1.35. But with tariffs weighing on sentiment, spending may be slowing. Longer term, analysts project fiscal 2025 profit to reach $6.20 per share, up 12.1% year over year, and rise another 15.2% to $7.14 per share in fiscal 2026.

Tariff Risks and Amazon

The storm of tariffs, driven by trade tensions and fears of a looming recession, is hitting Amazon hard. In addition to some sellers pulling out from Prime Day, sellers - especially from China - are either raising prices or scrambling to find new suppliers, all while inflation fears grow. Amid market sell-offs, AMZN’s stock feels the pressure. Yet, there’s a silver lining.

Amazon's AWS, its cash cow, remains a powerhouse, generating billions in operating income with high margins. The company is also investing heavily in its AI portfolio, including the $100 billion earmarked for 2025 to boost innovation. Despite the tariff risks and recession talk, Amazon’s diversified business model - from cloud services to AI - makes it less vulnerable to short-term challenges. Plus, its strong balance sheet means it can weather this storm and keep capitalizing on the ever-growing e-commerce sector. Investors, though understandably wary now, would do well to zoom out and consider Amazon's long-term resilience in this ever-evolving tech landscape.

What Do Analysts Expect for Amazon Stock?

Indeed, the tech giant has a lot at stake if U.S.-China tensions spark a broader slowdown - chilled consumer spending, and stalled business investment, hitting Amazon on multiple fronts. CFRA’s Arun Sundaram believes it can endure the tariff storm, but not without taking some damage.

As sellers tighten margins and pull back from Prime Day deals, Amazon finds itself in an awkward spot. The retail giant may hold steady, but its third-party sellers - key to Prime Day’s success - are the ones feeling the squeeze. While Amazon surveys vendors and touts strong partner interest, Sundaram suggests the real damage may be bubbling beneath the surface for merchants, not Amazon.

Analysts have been dialing down their expectations for Amazon lately, wary that Trump’s tariffs could hit both e-commerce sales and ad revenue. Oppenheimer trimmed its price target on AMZN from $260 to $220, citing tariff pressure on e-commerce margins. Still, the brokerage firm kept an “Outperform” rating, betting that AWS growth, despite thinner margins on retail, will keep investors content.

The analysts expect Amazon to hold market share by eating costs, not raising prices. With earnings ahead, they are signaling caution, but not backing away. Tariffs may sting, but cloud strength still makes AMZN a stock worth watching.

AMZN has a consensus “Strong Buy” rating overall. Of the 52 analysts in coverage, 46 recommend a “Strong Buy,” five suggest a “Moderate Buy,” and the remaining one gives a “Hold.” The mean price target of $246.43 suggests an upside potential of 33.6% from the current price levels.