Amazon Stock Drops After Rothschild Redburn Lowers Rating to Neutral

TLDR

• Rothschild Redburn downgraded Amazon stock from ‘Buy’ to ‘Neutral’ and lowered its price target to $250.
• The downgrade is based on concerns about AWS growth amid increased competition and the rising impact of generative AI.
• Despite the downgrade, Amazon stock continues to have strong support from Wall Street with a ‘Strong Buy’ rating from all analysts.
• Analysts project a 12-month price target of $296.64 for Amazon stock, indicating a 26.4% upside from its current value.
• Amazon’s cloud division, AWS, faces challenges despite recent growth, with limited upside, according to Rothschild Redburn.

Amazon’s stock (NASDAQ: AMZN) experienced a drop following a downgrade from Rothschild Redburn. The firm lowered its rating from ‘Buy’ to ‘Neutral’ and reduced its price target to $250. The new target suggests a 7% upside from AMZN’s last closing price of $232.

Amazon.com, Inc., AMZN

Rothschild Redburn’s Downgrade and Revised Price Target

Rothschild Redburn’s decision to downgrade Amazon stock is linked to concerns over the company’s cloud division, AWS. The firm lowered its price target for Amazon to $250, implying modest upside potential. Analyst Alex Haissl explained that although AWS has shown a recent reacceleration, the competitive environment has shifted, limiting future growth prospects.

Haissl stated that AWS, which had once exceeded expectations, is now facing more challenges. Despite its recovery, Haissl sees limited room for further gains, particularly compared with market expectations. He emphasized that while AWS remains a crucial part of Amazon, it may struggle to surpass its previous performance.

The analyst also compared Amazon’s situation to Microsoft’s, noting that while AWS is more integrated into Amazon’s operations than Microsoft’s Azure, both companies face similar challenges. The growing influence of generative AI has added further pressure on Amazon’s profitability, Haissl said. He concluded that generative AI is currently dilutive to AWS’s returns and its prominence continues to increase.

Wall Street Maintains Positive Outlook for Amazon Stock

Despite the downgrade, Amazon stock still enjoys strong analyst support. All 42 covering analysts have maintained a ‘Strong Buy’ rating on the stock. There are no ‘Hold’ or ‘Sell’ recommendations, reflecting confidence in Amazon’s future performance.

The latest analyst consensus suggests a 12-month price target of $296.64 for Amazon stock. This target represents an upside potential of 26.4% from its current value. Price targets range from $255 to $340.

These projections reflect ongoing optimism about Amazon’s long-term prospects despite recent concerns. Investors remain hopeful that the company’s cloud division and overall business model will continue to drive growth. However, the shift in the competitive landscape and the impact of generative AI present challenges for Amazon moving forward.

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