Amazon Shares Drop 4% as Trump's Tariff Threat Looms Over E-Com Giant's Topline

Amazon shares witnessed a sharp plunge of over 4% on Monday after financial service provider Raymond James downgraded the stock. In the last 5 trading sessions, Amazon shares have declined over 10%, trading around $167 price level.

Analyst Josh Beck reportedly said in a market note that the Trump administration's tariff policies might have a worse-than-estimated impact, which won't be limited to the E-commerce giant's supply chain.

“Regardless of tariff ‘stickiness’, further supply chain/logistics diversification likely creates a drag given China ... and rural US demand-side platform (DSP) (11% shipping) exposures,” Beck said, according to a report by CNBC. Beck downgraded Amazon stock from ‘Strong Buy’ to ‘Outperform’ and lowered the price target to $195 from $275. In the last 6 months, the shares of the company have remained in the red territory.

However, despite the cut, he remains “constructive” on the company’s AI initiatives and long-term investment strategy. So far this year, Amazon shares have plummeted over 24% on the Nasdaq, down from $220 price level in January to $166 currently.

Beck also mentioned that the Wall Street is underestimating the threat of tariffs and the impact of turbulent macro situation on the company's fiscal earnings. As for now, the investment outlook and return visibility will guide the brokerage's re-rating decision on the stock.

Tech stocks down

Amazon is not alone in bearing the brunt of subdued investor sentiment with other tech-stocks witnessing a similar decline. The NYSE FANG+ index, which tracks the share price of the top 10 American tech companies, experienced a sharp drop of nearly 3% on Monday. So far this year, the index has plummeted over 17% or 2,350 points, trading around 10,800 level.

Even Wall Street's darling stock 'Nvidia' witnessed heightened investor sell-off, with the stock dropping over 30% so far this year. Global uncertainty and certain estimates that the US might fall into recession have further downgraded the overall outlook, taking a toll on the investor mood. Other major tech stocks, including Apple and Meta, have also experienced a similar decline of around 20%.