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Anayst Explains Amazon (AMZN) Tariff Exposure

Amazon shares are on investors’ radar as the company launches new initiatives to grow its consumer business. Recently,  CNBC reported that the company’s devices unit got a new team to develop “breakthrough” consumer products. The stock is up 10% over the past 30 days.

Scott Devitt, Wedbush Securities senior analyst, recently explained in a program on CNBC why Amazon (AMZN) is less sensitive to the impact of tariffs than Walmart.

Amazon’s model is a little different than Walmart in that two-thirds of the sales come from third parties who set their own prices. So Amazon uses its first-party business to help drive competitive pricing, but a lot of the decisions are made outside of Amazon. And so the marketplace in general is a price-following marketplace. So if others hold price firm, I think you’ll see merchants on Amazon be forced to hold price firm. If Walmart tweaks pricing in some areas, you’ll see Amazon prices rise as well.

Amazon yet again impressed with its Cloud business in its latest quarterly results. AWS revenue jumped 16.9% year over year in the most recent quarter, while its operating income rose 22.6%. AWS has now surpassed a $100 billion annual run rate, playing a central role in helping businesses modernize infrastructure, reduce costs, and accelerate innovation.

The market often overlooks Amazon’s ads business, which is generating more than $10 billion in quarterly revenue despite being built from scratch. In the first quarter, ad revenue rose 19% from a year earlier to $13.9 billion, continuing to support overall profitability.

According to some Wall Street estimates, Amazon is projected to earn $6.20 per share in 2025 and $8.95 in 2027, reflecting 44.4% earnings growth over two years. The stock currently trades at 20.7 times its expected 2027 earnings, which makes it attractively valued.

Polen Global Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2025 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN) fell -13% in the quarter, stemming from weaker-than expected first quarter guidance and concerns over the potential tariff-induced headwinds they may face, given that many third party sellers on their e-commerce platform are based in China. However, we think their first-party and third-party commerce platform should prove fairly resilient, aided by strength in their Amazon Web Service cloud business and its bottom-of-funnel advertising business. Amazon remains our largest position, as we expect roughly 20% earnings growth over the next five years, driven by solid organic revenue growth and continued margin expansion. It remains an incredibly well-managed business with sustainable advantages and a long growth runway.”

While we acknowledge the potential of AMZN, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk.  If you are looking for an AI stock that is more promising than AMZN and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

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Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

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  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

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