Investing.com -- Raymond James downgraded Amazon (NASDAQ: AMZN ) shares to Outperform from Strong Buy and slashed its price target from $275 to $195, the lowest on the Street, citing rising investment pressure and underestimated margin risks.

In a note to clients, analysts said they took "a fresh look at the AMZN investment cycle" and walked away with a view that “the Street is underestimating EBIT pressures in 2025-26.”

While still constructive on Amazon’s long-term prospects in artificial intelligence, Raymond James warned that “with rising EBIT risk/limited monetization progress it is more challenging for us to stick with our Strong Buy rating.”

The downgrade comes amid an uneven macroeconomic outlook and newly announced U.S. tariffs, which Raymond James sees as a drag on Amazon’s China-exposed operations.

The analysts estimate that “~30% of online GMV and ~15% of ads are China-linked,” and expect a 200 basis-point hit to gross margins from China-sourced first-party goods.

In addition, Amazon is said to face logistics-related pressures, especially in rural U.S. delivery, as it expands its own network following UPS’s exit.

The firm also cited capital-intensive “supply chain/logistics diversification” efforts aimed at reducing dependence on China.

Raymond James trimmed its EBIT estimates for Amazon by $6 billion for 2025 and $12 billion for 2026, reflecting lower advertising and AWS expectations, as well as margin pressures in the company’s first-party business.

On AI, the firm acknowledged strong growth: “Monetization: Strongest evidence is multi-$B ARR revenue run-rate growing triple-digit,” but added that it remains “supply-constrained” and heavily front-loaded with capital.

The analysts also flagged rising costs from initiatives like Kuiper and Zoox, which could add $1–2 billion annually if commercialized.

Raymond James now prefers Meta (NASDAQ: META ), Uber (NYSE: UBER ), and MercadoLibre (NASDAQ: MELI ) over Amazon, citing clearer AI monetization paths and more visible return on investment.