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Amazon Stock in 2025: Headwinds and Tailwinds You Need to Know?
Mar.16, 2025, 1:36 AM ET author: StockHawk
Thank you all for supporting StockHawk investment blog powered by StockNow platform. In my previous Amazon blog ("Upcoming Amazon's Q3 Earnings: Is it a Buy?"), I made bold predictions about Amazon's stock price, which proved accurate regarding my one-year price target. As a follow-up, in this blog, I'll examine recent earnings data, Wall Street forecasts, latest market conditions and government policies, reassess tailwinds and headwinds, and provide my updated price target prediction.
Q4 24 Summary
Net sales increased 10% to $187.8 billion in the fourth quarter, compared with $170.0 billion in fourth quarter 2023. Operating income increased to $21.2 billion in the fourth quarter, compared with $13.2 billion in fourth quarter 2023. Net income increased to $20.0 billion in the fourth quarter, or $1.86 per diluted share, compared with $10.6 billion, or $1.00 per diluted share, in fourth quarter 2023.
Amazon continues to demonstrate impressive improvements in cash flow and margins, driven by enhanced retail fulfillment efficiency and strengthening AWS margins.
Q1 25 Guidance
Net sales are expected to be between $151.0 billion and $155.5 billion, or to grow between 5% and 9% compared with first quarter 2024. This guidance anticipates an unusually large, unfavorable impact of approximately $2.1 billion, or 150 basis points, from foreign exchange rates. Also, as a reminder, in first quarter 2024 the impact from Leap Year added approximately $1.5 billion in net sales. Operating income is expected to be between $14.0 billion and $18.0 billion, compared with $15.3 billion in the first quarter 2024.
Amazon's leadership appears to be taking a conservative approach with their guidance, particularly regarding foreign exchange rate headwinds. I'll address this further and share insights based on Q1 exchange rate data.
Q1 Wall Street Forecast
TipRanks shows next quarter's earnings estimate for AMZN is $1.37 with a range of $1.07 to $1.52. Net Income is projected at $14.7 billion with a range of $11.4 billion to $16.3 billion. Next quarter's sales forecast for AMZN is $155.31B with a range of $153.19B to $160.82B. Analyst sentiment remains overwhelmingly positive with 92 buys and only 3 holds.
Headwinds and Tailwinds
Amazon leadership's pessimism about foreign exchange rates may actually become a tailwind in Q1. The USD to JPY rate decreased approximately 5.7% (from 157 to 148), while the USD to EUR rate decreased approximately 6.1% (from 0.97 to 0.91). Consequently, Q1 foreign revenue in USD will likely outperform forecasts by at least 3%. The projected unfavorable impact of $2.1 billion could potentially become favorable. I predict Q1 revenue will exceed the high-end guidance of $155.5 billion, reaching $156-160 billion.
Other potential tailwinds that may drive revenue growth throughout 2025 include the Alexa Plus release. Although a CNET survey indicates over 50% of users may be unwilling to pay extra fees for Alexa Plus, the market is vast enough that even 10 million paid users would generate $2.4 billion in revenue. With free access for 200+ million Prime members helping to build a loyal customer base, continued innovation based on user feedback data could eventually lead to 100 million paid users, potentially representing $24 billion in yearly revenue.
On the negative side, headwinds include Kuiper project delays and escalating costs. While Kuiper could eventually generate billions in income for Amazon, the project's timeline has been extended, and costs continue to rise as noted in my previous analysis.
Another significant headwind is the impact of Trump tariffs, which will likely increase import costs by 10-20%. This could exacerbate sticky inflation and ultimately affect consumer confidence and spending. We'll need to monitor Q1 earnings reports across the retail sector to gauge the real impact.
Conclusion
Predicting short-term stock prices remains challenging due to multiple variables. As I mentioned in my previous blog, Amazon could reach $240 within a year. In fact, the stock reached $242.52 in early February 2025 before retreating to the $200 range. I believe Amazon stock will reach $250 within a year. Looking further ahead, I have an ambitious long-term prediction: Amazon's stock could reach $380 by the end of 2028.