Street View: Amazon's strategic shift could drive growth despite headwinds

Amazon.com AMZN.O on Thursday reported first-quarter cloud revenue growth and forecast operating income below estimates, disappointing investors

Shares down 1.37% at $187.59 in premarket trading

POTENTIAL GROWTH DESPITE CHALLENGES

BofA Global Research ("buy," PO: $230) says a wide selection of third-party products, strategic first-party purchases and a shift towards essentials should help Amazon outperform the retail sector if inventory conditions worsen

RBC Capital Markets ("outperform," PT: $230) says there are still unknown tariff-related challenges to overcome, including inventory issues and potential loss of advertising revenue due to lower volume

"We come away marginally more constructive on the prospect for another go at the AWS acceleration story and with AMZN's seller density carrying similar scarcity value to a META or GOOGL," says RBC

Morgan Stanley ("overweight," PT: $250) says AMZN will emerge stronger after this period, with its logistics leadership and AI advancements positioning it for retail market share gains

But visibility on costs for delivering a top experience for buyers and sellers in the second half of 2025 and 2026 remains low, says the brokerage

Wedbush ("outperform," PT: $235) sees several ways for Amazon to sustainably improve its margins, including better fulfillment processes and a shift towards higher-margin advertising and AWS revenues