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The Biggest Risk for Amazon Stock Investors Right Now | The Motley Fool

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  Published in Stocks and Investing on Sunday, November 9th 2025 at 6:43 GMT by The Motley Fool
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The Biggest Risk for Amazon Stock Investors, According to Recent Analysis

Amazon’s stock has long been a magnet for investors seeking exposure to the e‑commerce behemoth, its cloud powerhouse, and its growing portfolio of consumer tech. Yet a recent piece on The Motley Fool highlights that the very factors that have propelled Amazon’s growth may also be the single biggest threat to its future performance. The article, published on November 9 2025, breaks down the most pressing risks Amazon faces and explains why shareholders should keep a closer eye on the company’s financials, competitive dynamics, regulatory environment, and strategic bets.

1. Intensifying Competition in E‑Commerce

Amazon’s dominance in online retail is now under fire from a new wave of rivals. Walmart’s aggressive expansion into e‑commerce, bolstered by its own “One‑Stop” fulfillment centers, has eroded Amazon’s market share in the U.S. Meanwhile, China’s Alibaba, and European players such as Zalando and Otto, have increased their cross‑border logistics capabilities, creating a more level playing field. The Fool article cites data from Amazon’s Q2 2025 earnings call, noting that Amazon’s share of U.S. online sales fell to 42 % from 46 % in the previous year—a decline that could continue if competitors continue to invest heavily in shipping and last‑mile delivery.

Competition isn’t just limited to traditional retailers. Amazon’s own marketplace, which has historically been a revenue driver, now faces scrutiny from new entrants that use AI‑driven price‑optimization tools to match or beat Amazon’s prices. The article warns that if Amazon can’t maintain its pricing advantage, it could lose both consumer loyalty and the high margin from direct sales.

2. Rising Cost Pressures and Margin Erosion

Amazon’s financial statements for 2025 reveal a sharp uptick in operating expenses. The company has poured capital into fulfillment network expansions, AI research, and new logistics ventures such as drone delivery and autonomous delivery vans. According to the Fool article, Amazon’s operating margin for the year fell from 6.1 % in 2024 to 4.8 %. Logistics costs now account for 42 % of Amazon’s net revenue, up from 36 % in 2024, leaving less room for margin improvement.

Moreover, Amazon’s workforce costs are climbing. The company’s labor costs increased by 8 % YoY in 2025, reflecting higher wages, expanded health benefits, and an influx of seasonal hires. The Fool piece notes that the company’s “flex” workforce, while providing agility, adds a layer of unpredictability to labor expenses that could tighten margins further if inflation persists.

3. Regulatory and Antitrust Scrutiny

The U.S. Federal Trade Commission (FTC) has opened a formal antitrust probe into Amazon’s marketplace practices, focusing on how the platform treats third‑party sellers and whether it leverages first‑party data to undercut competitors. The article points out that the probe could lead to significant regulatory costs, including fines and the need for structural reforms—potentially slowing down Amazon’s ability to invest aggressively in new growth areas.

Internationally, Amazon faces increased regulatory scrutiny in the EU over data privacy and consumer protection. The European Commission’s “Digital Services Act” could impose stricter compliance requirements on Amazon’s marketplace, again diverting resources away from core operations.

4. Heavy Capital Allocation to Growth Ventures

Amazon’s management continues to commit significant capital to non‑core businesses such as AWS, Amazon Health, and Amazon Robotics. While AWS remains the most profitable segment, generating over 50 % of Amazon’s operating profit, the Fool article stresses that AWS’s growth rate is slowing from 33 % YoY to 20 % YoY. The company’s investment in AI services like Amazon Bedrock and its partnership with OpenAI raises questions about long‑term profitability, given the high upfront costs and competitive pressure from Microsoft Azure and Google Cloud.

The article also highlights Amazon’s push into the streaming arena with Prime Video and its rumored expansion into live streaming and esports, ventures that require massive marketing and content acquisition expenditures. These bets add further risk to the company’s already tight cash flows.

5. Potential Over‑Revelation of Valuation

Amazon’s stock price has appreciated over 80 % since the beginning of 2021, a growth that many analysts view as partly driven by a speculative bubble. The Fool article discusses how Amazon’s forward P/E ratio has ballooned to 28, compared to the S&P 500’s 22, suggesting that the market may be overestimating Amazon’s growth potential. The piece cautions that a modest slowdown in sales or a rise in operating expenses could quickly erode this premium.

6. Global Economic Headwinds

The article also underscores the impact of macroeconomic forces—particularly inflation, supply chain disruptions, and fluctuating commodity prices. Amazon’s reliance on global supply chains makes it vulnerable to disruptions in key sourcing hubs such as China and Southeast Asia. Rising freight costs and geopolitical tensions could further strain Amazon’s margins.

Takeaway for Investors

While Amazon remains a leader in many domains, the Fool article paints a nuanced picture: the same factors that have made Amazon a dominant force also pose significant risks. Rising competition, higher operating costs, regulatory scrutiny, and a heavy commitment to growth ventures all conspire to create a landscape where Amazon’s margins could shrink and valuation could become more volatile.

Investors who are comfortable with a long‑term, high‑risk, high‑reward strategy may still find Amazon an attractive holding. However, those who are sensitive to market volatility, margin erosion, or regulatory fallout may want to reassess their exposure or consider diversifying into other cloud or e‑commerce players that do not carry the same level of concentration risk. The key will be to monitor Amazon’s quarterly financials closely, watch for any regulatory changes, and keep an eye on how the company balances its massive investment pipeline against the need for profitability.