Caution Rises Around AWS as Redburn Lowers Amazon (AMZN) to Neutral

Amazon.com, Inc. (NASDAQ:AMZN) is one of the AI Stocks Making Moves on Wall Street. On November 18, Rothschild & Co Redburn’s Alexander Haissl downgraded the stock to “Neutral” from buy with a $250 price target. The firm has turned cautious on AWS due to concerns about generative AI economies, citing limited upside despite robust positioning.

The firm is of the view that there was previously optimism surrounding AWS’s positioning in the generative AI space. It was better positioned than Azure due to its vertical integration and partnership with Anthropic.

“Taking a more cautious view on AWS is a difficult but necessary step. Throughout the various Gen-AI narrative cycles, we maintained our conviction that AWS was doing the right things and was better positioned than Azure — thanks to its vertical integration and its partnership with Anthropic, which we see as more attractive than OpenAI given its focus on the software development Gen-AI cycle, the most compelling and durable use case.”

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However, the firm believes that this backdrop has shifted and AWS has reaccelerated broadly, leaving limited meaningful upside ahead. The firm believes that Amazon now faces a similar challenge to Microsoft.

“Moreover, Amazon now finds itself in a similar position to Microsoft: although AWS captures more value within the stack, Gen-AI remains dilutive to returns — and its share is increasing.”

Amazon.com Inc. (AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions.

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Disclosure: None.