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U.S. stocks have made a V-shaped recovery from the April lows, and the S&P 500 Index ($SPX), which briefly tumbled below 5,000, is now above the 6,000 level. The world’s most popular index has turned green for the year, but the rally seems to be losing steam despite some positive noise around tariffs and trade deals.
Looking at the Magnificent 7, Tesla (TSLA), Apple (AAPL), Alphabet (GOOG), and Amazon (AMZN) are still in the red despite having rebounded from their 2025 lows. In this article, we’ll analyze whether Amazon stock can rise further from these levels, as the markets are currently looking vulnerable with the tariff story mostly played out on the upside.
China Tariffs Still Remain a Headwind
While the U.S. and China have reached a temporary trade truce, imports from the country still attract a 55% tariff. This includes a 10% base “reciprocal” tariff, a 20% “fentanyl-related tariff,” and the 25% tariff that was already in place. This is still quite high, even if it is significantly lower than the peak 145% tariff that President Donald Trump imposed on China in April.
The tariffs are a challenge for all retailers, even though Amazon might come out stronger as it did during the COVID-19 pandemic. However, the steep tariffs may dampen sales in the short to medium term for all retail and e-commerce companies, including Amazon. The company has been feeling the pressure on its top line, and its sales guidance has been below Street estimates for the last two quarters.
Amazon investors should also be cognizant of the steep rise in the company’s depreciation expenses in the coming years as it ramps up its investments into artificial intelligence (AI). Amazon’s per-share earnings are expected to rise by only 14.1% year-over-year each in 2025 and 2026.
Is Amazon Stock a Buy Now?
While there are short-term challenges in Amazon’s e-commerce business, which might take a toll on both its revenue growth and margins, the company has other growth areas that can offset the impact. For instance, Amazon’s digital advertisement business has been doing pretty well, and revenues rose 19% year-over-year to $13.9 billion in Q1 2025. The digital ads business has a decent growth runway as the company ramps up ads on Prime. The company has expanded Prime ads to global markets and starting next week, it will start showing ads to its subscribers in India.
Amazon is also among the prominent AI plays, and is already reaping the rewards of its investments. AI will also help boost Amazon’s revenues and help it streamline its costs, particularly in logistics.
During the Q1 earnings call, CEO Andy Jassy said that while previously the company believed that Amazon Web Services (AWS) had the potential to become a “multi-hundred-billion-dollar revenue run rate business,” he now thinks that “it could be even larger” with the demand for generative AI.
That said, Amazon now trades at a forward price-earnings (P/E) multiple of 34.5x, which, while not unreasonable, is not mouthwatering either, given the tepid earnings growth that analysts expect over the next couple of years. Overall, while Amazon’s long-term growth story looks intact given its presence in multiple high-growth and structural stories like e-commerce, cloud, AI, streaming, and digital advertising, I am a bit wary about the stock in the short term, especially as the broader markets lose steam.
While I continue to hold my existing Amazon shares, I don’t find the price currently tempting enough to trigger a fresh purchase. I used the April meltdown to add to my positions and will sit out for now, waiting for a better entry point.
AMZN Stock Forecast
Of the 53 analysts actively covering Amazon, 45 rate it as a “Strong Buy” and six as a “Moderate Buy.” The remaining two rate AMZN as a “Hold” and its mean target price of $241.42 is 13.2% higher than the June 11 closing price. Amazon’s Street-high of $305 (via Tigress Financial) implies potential upside of 43% over the next 12 months.
