Amazon (AMZN, Financial) shares dropped nearly 5% Monday after Raymond James dialed back its optimism on the stock. The firm downgraded Amazon to "Outperform" from "Strong Buy" and cut its price target by 29%, bringing it down to $195 from $275.
Analyst Josh Beck explained the move, pointing to growing risks tied to the U.S.–China tariff fight. While he still sees long-term potential in Amazon's AI and broader investments, short-term earnings pressure and slow progress on monetization made it harder to stick with the previous bullish call.
One of the big worries? About 30% of Amazon's merchandise — think electronics, clothing, and toys — comes from China. With new tariffs hitting as high as 145%, Beck estimates that gross margins could take a 10% hit, while overall margins could shrink by about 2%.
Raymond James also flagged another pain point: advertising. Chinese businesses spent around $8 billion on Amazon's platform last year, making up 14% of its ad revenue. That's now in jeopardy too.
Amazon stock is down 24% so far this year, as trade tensions and cost pressures weigh more heavily on the e-commerce giant.
