This article first appeared on GuruFocus.
Amazon.com Inc. (AMZN, Financials) was downgraded to Hold by Invictus Origin’s Oliver Rodzianko, who warned that current valuation levels and macroeconomic risks justify caution despite the company’s fundamental strength.
The downgrade comes after investors became excited about AI driven growth, which has pushed up P/E ratios across large-cap tech. Rodzianko said that Amazon’s future multiple seems too high and might go back to its average, especially when the market processes the high costs of AI-related investments.
Based on a forward P/E of 25 and estimated FY27 profits per share of $10.25, the analyst set a 12-month price objective of $255 per share. That goal is lower than the current average estimate of $295.
Rodzianko also suggested moving portfolios toward lower-beta assets, such as government bonds, since he thought that equities prices may fall and the market might become tighter in the longer run.
Investors will turn to Amazon’s next quarterly results for further information on margins and long-term AI monetization methods, which are still important factors in determining the company’s value.