Amazon can emerge stronger from the current concern about tariffs, but much remains unknown, Chief Executive Andy Jassy said Thursday. The tech giant's Q1 earnings beat didn't off much relief even as Amazon stock edged higher Friday.
"People are buying a lot of their everyday essentials at Amazon," Jassy told analysts on a conference call Thursday. "We also have extremely large selection, hundreds of millions of unique SKUs, which means we're often able to weather challenging conditions better than others."
Amazon hadn't yet seen any slowdown, or "attenuation" in demand, the Amazon leader added. But "none of us know exactly where tariffs will settle or when," he cautioned.
That was a clear theme of Amazon's call with analysts. The words "uncertain" and "uncertainty" popped up 11 times among comments from Amazon's executives or in questions from analysts, according to a FactSet transcript. Neither word could be found on transcripts from Amazon's fourth-quarter earnings call in early February or its third quarter call in late October.
Three of those mentions came in the span of a few sentences from Amazon Chief Financial Officer Brian Olsavsky. He was responding to a question about how tariffs factored into the company's second quarter operating income guidance, which ad a wider range than usual and was well below Wall Street's prior forecasts.
"I think with the uncertainty we've added a bit to the range that we've given you," Olsavsky told analysts. "We generally have a wide range. But just the general uncertainty that we're seeing and uncertainty of consumer demand and everything else is causing us to increase the ranges a bit. So we'll see. We feel it's an informed view of Q2 right now."
Amazon Stock Falls Following Q1 Report
The lower-than-expected profit guidance weighed on Amazon shares after the company's report. But Amazon stock bounced back early Friday, gaining more than 1% to 192.85 premarket on the stock market today. Revenue growth for the Amazon Web Services cloud business was also slightly below estimates.
Amazon stock entered trading Friday down 13% this year. Shares are off about 6% since April 2's "Liberation Day," when President Donald Trump announced his broad tariff plan. Trump has paused some of those tariffs – helping Amazon and other stocks recoup some losses – but 145% levies on Chinese goods are still in place. As much as 30% of the products sold on Amazon are tied to Chinese goods, according to analyst estimates.
Jassy said that the company saw "heightened buying" in some categories in April. He attributed at least some of that to people stocking up ahead of any tariff hits. He added that prices on retail items have not "appreciably" increased to this point.
"Given our really broad selection, low pricing and speedy delivery, we have emerged from these uncertain eras with more relative market segment share than we started and better set up for the future," Jassy said. "I'm optimistic this could happen again."
Analyst View On Amazon Q1 Earnings
Several Wall Street analysts trimmed their price targets for Amazon stock following the report while remaining bullish overall.
Bernstein analyst Mark Shmulik cut his target to 230 from 235 while sticking to an outperform call. He said there is "conservatism baked into" the company's operating income guidance. But the range could also represent the risk that Amazon sellers will cut back on buying advertising if sales slow. And advertising is a key contributor to Amazon's profits.
"Long-term, Amazon remains a clear top pick with management confirming that the company tends to take share in market shocks," Shmulik wrote. "We continue to like the higher margin profile of the Amazon Web Services business but acknowledge that slowdown in the ad business may offset some of those gains."
Stifel analyst Mark Kelley also reiterated a buy call but cut his target to 245 from 248.
"Overall, the tariff commentary reinforced our view that Amazon is relatively well positioned, with a mix of essential items, and everything in between from Amazon Haul up to higher-end products," Kelley wrote. "AWS growth was marginally light, but the forward commentary remains positive (capacity being consumed the moment it becomes available), and backlog growth accelerated by roughly 600 basis points."
