Amazon trapped in tariff dilemma: Preserve profits or maintain market share? Evercore ISI warns of stock price pressure risk

According to the Zhitong Finance APP, Mark Mahaney, head of internet research at Evercore ISI, has issued a warning: If tariffs continue to escalate, e-commerce giant Amazon (AMZN.US) will face a difficult choice between "protecting profits" and "maintaining market share," and its recent profit expansion momentum may be reversed.

Mahaney stated in an interview that rising tariff costs pose a substantial threat to Amazon's retail business. As one of the technology giants most reliant on imported goods globally, Amazon is forced to choose between "absorbing tariff costs" or "passing the pressure onto consumers." He pointed out, "If tariffs become long-term, Amazon will either be forced to lower prices to maintain competitiveness or face the risk of losing market share—this is a zero-sum game."

This contradiction has already been reflected in the capital markets: despite Amazon's stock price falling 14.9% this year, Mahaney predicts that if the company sacrifices profit margins to protect market share, its valuation logic will be impacted.

Analysts further warn that if tariffs lead to a 30% increase in retail prices, Amazon's broad customer base covering high, middle, and low-income groups may simultaneously reduce demand. This risk exposure is significantly different from travel companies like Expedia (EXPE.US) and Airbnb (ABNB.US), which focus on discretionary consumption—these companies are more directly affected by economic cycle fluctuations, but Amazon must deal with more complex consumer segmentation challenges.

Despite short-term pressure, Mahaney believes that Amazon is likely to maintain its established strategy: First, the company has rarely engaged in political games historically and tends to absorb costs through supply chain optimization; second, management may prioritize protecting market share to avoid repeating the slowdown in Prime membership growth caused by price increases in 2019.

Notably, Mahaney emphasized: "Amazon will not adjust its multi-billion dollar AI and cloud infrastructure investments due to short-term pain." He pointed out that the generative AI technology race has entered an "arms race" stage, and if Amazon reduces capital expenditures at this time, it may lose long-term competitiveness in areas such as AI training chips and large model inference.

As Amazon's next financial report approaches, the market will focus on three core indicators. First, regarding tariff response costs, whether management discloses specific impact amounts or has initiated a new round of supplier negotiations, which will directly affect the company's cost control and profit levels.

Second, concerning Prime membership, whether the price increase strategy has led to a slowdown in subscription user growth, which relates to the stability of the company's membership revenue and user base. Third, regarding the profitability resilience of AWS, whether the cloud business can continue to offset pressure from the retail segment, becoming an important support point for the company's performance, which is crucial for the company's overall financial performance and strategic development.

Mahaney stated that if the financial report guidance suggests profit margins are under pressure, Amazon's stock price may face a new round of valuation reshaping. This tariff storm is becoming a key battle to test the effectiveness of Amazon's "growth-first" strategy