Down 25% From Its All-Time High, Is Amazon a Buy Right Now?

Keithen Drury, The Motley Fool

Mon, Apr 7, 2025, 3:30 AM 4 min read

Amazon (NASDAQ: AMZN) hasn't been immune to the marketwide sell-off seen lately. And immoderate of the tariffs that President Donald Trump precocious announced could heavy impact the institution owed to wherever astir of the goods it sells travel from.

To adhd different furniture of complexity, Amazon absorption besides launched a bid to bargain TikTok from ByteDance.

There are tons of moving pieces with Amazon stock, making it an incredibly analyzable investment. But with the shares down importantly from their all-time high, should you bargain 1 of the apical stocks connected the dip?

First, let's tackle tariffs. It's nary concealed that Amazon's e-commerce level generates plentifulness of gross from goods that are sourced extracurricular of the U.S. Alongside the tariff announcement was the closing of the de minimis exemptions, which let packages nether $800 to walk done without duties. That regularisation has been altered to a complaint of 30% oregon $25 per item, fundamentally ending the concern models of companies similar Shein and Temu and pushing those clients toward Amazon.

But it's not that simple. The institution has galore third-party sellers that besides usage this practice, truthful the terms of immoderate goods connected its marketplace volition rise, which could harm sales. Furthermore, Amazon's nonstop concern could beryllium harmed due to the fact that it besides sources galore of its goods extracurricular the U.S.

There are 3 ways the outgo of a tariff volition beryllium absorbed:

1. The supplier absorbs it.

2. The seller absorbs it.

3. The user absorbs it.

The outgo increases volition apt impact each 3 parties to the transaction, but astatine antithetic rates. When Amazon reports its first-quarter results aboriginal this period oregon successful aboriginal May, determination apt volition beryllium immoderate much commentary connected the effects of tariffs. But until then, investors are near assuming the worst-case scenario.

However, there's an important origin that investors are forgetting.

Amazon's e-commerce concern is the astir consumer-facing segment, but it's acold from the astir important. Amazon Web Services (AWS) is what I would see the astir important part due to the fact that it produced 58% of the company's operating profits successful 2024.

AWS won't beryllium as affected by the tariffs, since it's providing computing powerfulness implicit the unreality to clients. This should beryllium investors' absorption due to the fact that it is some the maturation operator and largest nett shaper for Amazon.