Investment bank Raymond James downgraded its rating on Amazon (AMZN) to Outperform from Strong Buy, Schwab Network reported today. According to the investment bank, Wall Street is "underestimating Amazon's earnings pressures in 2025 and 2026."

A customer entering an internet retail store, illustrating the convenience of online shopping.

Raymond James slashed its price target on AMZN to $195 from $275.

Amazon's Negative Catalysts

The tech giant will be hurt by an "uneven macro environment, tariffs, and higher investments," Raymond James warned. Moreover, AMZN has made "limited progress on monetization" and is facing "rising earnings risk," according to the investment bank.

Amazon's Strengths

Raymond James is still "constructive" on Amazon due to the firm's "AI prospects and long-term investments," Schwab reported. Among the areas in which Amazon is expected to invest are its supply chain and logistics.

More Information About AMZN

Analysts on average expect the company's earnings per share to reach $6.25 this year and $7.51 in 2026 from $5.53 in 2024.

In the last month, AMZN retreated 12%, while the shares have sunk 22% in the last three months.

While we acknowledge the potential of AMZN, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: The author owns shares of AMZN but has no intention of trading them in the next 48 hours. This article is originally published at Insider Monkey.