Amazon (AMZN) has emerged as a top pick for traders, with the market looking like it may bounce back in the short term. Although there is still no shortage of macroeconomic factors holding prices at bay, the e-commerce juggernaut has some enticing avenues of future gains, intriguing top investors. As the economy is looking to avert further downturn, companies like Amazon are showing resilience for various reasons, making them valuable investments due to their strength.
One of the biggest adversaries for Amazon and other magnificent seven stocks in 2025 has been tariff concerns. Amazon is the world’s largest online retailer. Therefore, a majority of its goods come from China, which currently has a sky-high tariff rate. If this cost is passed onto the consumer, these goods may not be purchased anymore. That would significantly harm Amazon’s retail sales, thus dropping its stock value.
However, some analysts suggest that Amazon has the uncommon ability to withstand these tariffs and further economic decline for several reasons. For starters, most of Amazon’s profit does come from North America, taking up the majority of income compared to other heavily tariffed parts of the world. Most notably, though, is how much Amazon has made from its AWS platform. Despite Amazon Web Services generating only 17% of revenue, it makes up over 50% of its operating profits. This is because the margins on this business are far superior to the two e-commerce divisions.
Amazon Leads in Several Sectors That Could Keep Profits High
Amazon has put much more time, resources, and money towards improving AWS and making it a software giant. As a result, AWS has become a leader in cloud computing, an industry that continues to grow worldwide. The best part, there is the belief that this industry won’t be as heavily impacted by tariffs as Amazon’s e-commerce wing. Thus, the majority of AMZN’s operating profits won’t be hit as hard by US tariff threats.
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Advertising also remains a big player for Amazon (AMZN) and its profits. Advertising services have grown to become a large chunk of Amazon’s revenue picture, making up 15% of Amazon’s total revenue in Q4. While an exact number isn’t released, the percentage continues to reflect healthy gains, which are not expected to slow even in an economic downturn.
Furthermore, there is still an ongoing AI arms race, which needs computing power from data centers to train and run these models. As Amazon continues to invest in AI development and its data centers, it is working to ensure its data center buildout doesn’t slow down.
Amazon is slated to release its latest earnings report this week on May 1. A positive earnings report is expected, and it could send AMZN stock towards $200 if all goes well. At press time, AMZN is trading at just over $180 per share.