Amazon stock slips despite long-term strength
Amazon has been a powerhouse for long-term investors, delivering an average annual return of 26.17% over the past 15 years. But in 2025, Amazon stock has stumbled, falling over 8% year-to-date compared to the S&P 500’s modest 1.12% decline.
Rising macroeconomic concerns and questions around AI investment have sparked doubt, yet many analysts believe this is a short-term dip in a long-term success story.
Economic uncertainty weighs on Amazon shares
The first major concern dragging Amazon stock down is the economy itself. U.S. GDP turned negative in Q1 2025, raising fears of a recession. Meanwhile, hiring freezes and layoffs are becoming more common across industries.
Tariffs imposed by the Trump Administration have also introduced instability, raising costs for businesses and consumers — something Amazon, as the world’s largest online retailer, cannot ignore.
AI spending fears hit Amazon’s Web Services
AI-related stocks have also taken a hit in early 2025. Investors fear companies will reduce AI infrastructure spending after a huge push in 2024. As Amazon Web Services (AWS) plays a central role in cloud-based AI, any slowdown poses a threat to this critical revenue stream.
That’s a double blow for Amazon, which is vulnerable to both a consumer spending slowdown and a drop in enterprise tech investments.
Analysts dismiss AI slowdown as overblown
Despite these concerns, Morgan Stanley recently called investor fears over AI spending “laughable.” Data from CV VC backs this up, showing that 53% of global venture capital in Q1 2025 went into AI — totaling $59.6 billion.
These figures suggest Amazon will continue benefiting from robust demand for cloud and AI solutions through AWS.
Amazon stock viewed as a long-term opportunity
While Amazon stock is under pressure now, analysts overwhelmingly remain bullish. Out of 70 experts covering the stock in May 2025, 66 rate it a “buy” or “strong buy.” The average 12-month price target is $238.79, indicating a potential upside of 19%.
This presents a possible buying opportunity for long-term investors who believe in Amazon’s resilience.
Tariff policy remains a wild card for Amazon
Much of the market’s recent volatility — including that of Amazon — stems from uncertainty around the Trump administration’s shifting tariff strategy. If tariffs persist or escalate, it could depress both consumer sentiment and operational margins for Amazon.
However, if trade conditions stabilize, Amazon may rebound quickly as costs and supply chain pressures ease.
Bottom line — Should you buy Amazon now?
Amazon is clearly facing near-term headwinds. But the company still boasts strong fundamentals, diversified revenue streams, and industry-leading infrastructure.
For investors with a long-term horizon and tolerance for volatility, the current dip in Amazon stock could be a strategic entry point. As always, align any investment with your personal risk tolerance and financial goals.