DA Davidson Thinks Amazon.com (AMZN) is “Losing the Lead” – Here’s Why

Amazon.com, Inc. (NASDAQ:AMZN) is one of the best e-commerce stocks to buy now. Amazon.com, Inc. (NASDAQ:AMZN) was downgraded from Buy to Neutral by DA Davidson on February 6. The firm also revised the price target on the stock to $175 from $300, telling investors that Amazon.com, Inc. (NASDAQ:AMZN) is “losing the lead” in cloud computing while exhibiting the early signs of a strategic disadvantage in the rapidly evolving and AI-driven retail landscape. The firm brought AWS in comparison with competitors, pointing out that while AWS grew 24% year-over-year, it is falling behind rivals like Microsoft’s Azure and Alphabet’s Google Cloud, which rose 39% and 48%, respectively.

DA Davidson further cited concerns regarding Amazon.com, Inc.’s (NASDAQ:AMZN) retail business, which is struggling to adapt to a  “new chat-driven Internet” dominated by Gemini and ChatGPT. The firm believes that the company may need to invest $50 billion in OpenAI to remain competitive in advanced AI models, as it is “scrambling to catch up” and is pushing heavier spending. The firm further stated that Amazon.com, Inc. (NASDAQ:AMZN) could face a “structural disadvantage” without direct AI integrations.

In another development, BofA also revised the price target on Amazon.com, Inc. (NASDAQ:AMZN) to $275 from $286 on February 6, maintaining a Buy rating on the shares. The firm told investors that while the fiscal Q1 outlook points towards stable revenue growth on the high-end with the possibility of additional AWS acceleration, investments will weigh on margins.

Amazon.com, Inc. (NASDAQ:AMZN) is a multinational technology company that provides online retail shopping services. It operates through the North America, International, and Amazon Web Services (AWS) segments. Its AWS segment covers global sales of storage, computers, databases, and other services for government agencies, academic institutions, startups, and enterprises.

While we acknowledge the potential of AMZN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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