Amazon Stock Hits Turbulent Waters. Is It a Buy Now?

Navigating recent highs, cloud investments and analyst forecasts

Recent Highs and Dips

All time high: Amazon shares peaked at around $242.52 in early February 2025, its highest level in over a year.

Flat performance: Despite a strong first half, shares have gained only 6 – 8% year-to-date and remain below that February high.

Post earnings plunge: On 31 July, shares fell approximately 7% after hours, weighed down by soft Q3 guidance and concerns over AI capital expenses.

 

What Analysts Are Saying

Wall Street sentiment remains overwhelmingly positive:

UBS calls Amazon the most undervalued among tech giants, citing investments in AWS, advertising and Project Kuiper. Their upgraded price target: $271 (18% upside).

Jefferies is bullish, highlighting robust e commerce and ads growth. Their price target: $265.

Bank of America anticipates AWS led growth driven by AI demand, setting a target of $265 too.

Morgan Stanley labels Amazon a “top pick”, with a target of $300, and optimistic bulls see potential up to $350, more than 50% upside.

Visible Alpha’s consensus: all 25 analysts rate Amazon a “Buy”, with an average target of $249–$252, slightly above current levels.

In short: all covered analysts see further gains once short-term volatility subsides.

 

Strengths, Headwinds and Forecast Drivers

Key tailwinds:

•            Solid retail performance: Prime Day delivered record e commerce sales.

•            Advertising growth: Brands are shifting budgets toward Amazon Sponsored Ads.

•            AWS momentum: Cloud growth of 17%–18% continues, even amid infrastructure constraints.

Key concerns:

Profit pressure from AI spending: Amazon spent a massive $31.4 billion, mostly on AI infrastructure cutting into margins and depressing Q3 profit estimates.

AWS growth trailing peers: Competitors like Microsoft and Google saw 32% to 39% cloud growth vs Amazon’s 17.5%.

        Tariff uncertainty: Unresolved U.S./China trade tensions pose ongoing risk to retail margins. Amazon continues to navigate this headwind.

 

Is Amazon a Smart Buy Today?

Prospective Upside:

•            Analysts see 11% to 30% potential gains, with Morgan Stanley’s “bull case” at $350.

•            Diversified revenue streams, retail, ads, AWS, logistics and hardware offer resilience and strategic growth drivers.

•            Amazon remains well-positioned in the AI and cloud value chain, especially through its OpenAI and Anthropic partnerships.

Considerations:

•            The stock is trading below recent highs, so near term reacts may be muted.

•            High capital expenditure continues to weigh on margins, and the market demands clearer ROI from AI infrastructure.

•            Macro uncertainties especially tariffs and inflation may introduce volatility.

 

Conclusion: Amazon, Buy Now or Wait?

With all major analysts rating Amazon a buy, and price targets ranging from $265 to $300 (or more), the stock offers meaningful upside potential. Its diversified growth engines in e commerce, advertising, and especially AWS/AI, provide strong long-term momentum.

However, recent profit guidance and AI spending headlines remind investors that clarity on margins and capex returns is essential. For long-term investors comfortable with some near-term noise, Amazon remains a compelling buy. Those more cautious may prefer to watch for confirmation of accelerating AWS growth or margin improvement before adding to positions.

Sources: (FT.com, Wall St Journal, Reuters.com, Investor.com)