Amazon’s Stock Outlook Divides Analysts Amid TikTok Bid

SEATTLE, Wash. — Amazon‘s stock outlook is facing scrutiny from analysts, coinciding with the company’s recent bid to acquire TikTok amid a deadline threatening the app’s ban in the U.S. The sharply contrasting views on Amazon (AMZN) come as market experts weigh in on the implications of macroeconomic factors and the company’s evolving business model.

On a recent episode of the Schwab Network, two guests expressed divergent opinions on Amazon’s future. Ron Westfall, Research Director at The Futurum Group, described ‘alarm bells’ ringing for the tech giant. He cited troubling trends in consumer spending as indicated by recent reports from Walmart (WMT) and Delta (DAL), which may suggest a cooling economy.

Westfall pointed to Amazon’s first-quarter fulfillment guidance, which fell short of expectations, and warned that increasing trade tariffs on China could significantly impact the company, given that 25% of its products originate from the Asian nation. ‘Macro factors are compounding challenges for Amazon, especially as companies brace for a cautious economic environment that could affect their cloud business,’ he stated.

In stark contrast, Chris McMahon, CEO of Aquinas Wealth, maintained a bullish stance on Amazon stock, arguing that the company’s cloud business, Amazon Web Services (AWS), presents a strong case for investor confidence. He set a $280 price target on AMZN, claiming AWS generates an annual revenue of $100 billion and is growing at an impressive rate of 20%.

‘In a high-inflation environment, Amazon stands to benefit from consumers seeking value while its retail operations show robustness against competitors like Walmart and Costco,’ McMahon said. He described Amazon as ‘undervalued’ compared to other investment opportunities in the tech sector.

Megan Brantley, Vice President of Research at LikeFolio, offered a balanced perspective, indicating that recent stock pullbacks make Amazon shares increasingly attractive. She noted a favorable reception of Amazon’s Spring Sale, which concluded on March 31, signaling recovering consumer interest after a challenging period for the e-commerce segment.

Brantley commented, ‘Amazon’s e-commerce business exhibits resilience, particularly due to the strength of its Prime program, although there’s evidence that middle and lower-income groups are tightening their spending.’

As the April 2 deadline looms regarding TikTok’s ownership, experts believe the bid may also reflect a broader strategy for Amazon to tap into the evolving social commerce landscape. Jasmine Enberg from eMarketer stated, ‘Amazon’s reported bid illustrates TikTok’s significant capabilities in e-commerce, following the growing trend where consumers prefer completing purchases on social platforms.’

Experts emphasize that acquiring TikTok could enhance Amazon’s market presence with younger consumers and bolster its advertising revenue. As negotiations unfold, Amazon appears positioned at a critical intersection of political relations and economic recovery.