Amazon Downgraded to Neutral as Price Target Falls to $175 and AWS Trails Rivals
DA Davidson downgraded Amazon from Buy to Neutral and slashed its price target to $175 from $300, citing AWS growth of 24% trailing Microsoft Azure’s 39% and Google Cloud’s 48%. The firm warned Amazon may need up to $50 billion in OpenAI investment to avoid a structural disadvantage in AI-driven retail.
1. DA Davidson Lowers Rating and Price Target
DA Davidson downgraded Amazon from Buy to Neutral on February 6, cutting its price target to $175 from $300. The firm cited growing strategic disadvantages in cloud computing and retail as key concerns.
2. AWS Growth vs Competitors
AWS revenue rose 24% year-over-year in Q4, lagging behind Microsoft Azure’s 39% and Google Cloud’s 48% growth rates. The slower expansion raises questions about Amazon’s cloud leadership amid intensifying competition.
3. AI Investment Challenges in Retail
DA Davidson warned that Amazon’s retail segment faces a structural disadvantage in the emerging chat-driven Internet era. It suggested the company may need up to $50 billion in OpenAI investment to integrate advanced AI and remain competitive.
4. BofA Adjusts Price Target and Outlook
Bank of America trimmed its price target to $275 from $286 while maintaining a Buy rating, forecasting stable high-end revenue growth in Q1. It noted that accelerated AWS investments will continue to pressure margins.