Amazon.com (NASDAQ:AMZN) shares fell nearly 3% intra-day today after Wells Fargo analysts downgraded the company to Equal Weight from Overweight, lowering their price target to $183 from $225. The analysts pointed to several near-term pressures that could impact Amazon's operating income, including continued investment in Project Kuiper, anticipated challenges in Fulfillment by Amazon (FBA) fees, and a slowdown in advertising operating income growth. The analysts adjusted Amazon’s operating income estimates downward by $5.4 billion, $4.5 billion, and $5.5 billion for 2025, 2026, and 2027, respectively, reflecting reductions of 7%, 5%, and 5%. They noted that while the market is bracing for fourth-quarter margin impacts, first-half 2025 margin expansion may also be limited. The analysts remain cautious until visibility around Amazon’s margin expansion improves. They highlighted growing competition from Walmart, whose expanding fulfillment services and competitive pricing in third-party merchant logistics could limit Amazon's FBA fee growth. Wells Fargo estimates Amazon’s FBA fee inflation may see a decline of around $2 billion annually if inflation remains closer to 2024 levels. Additionally, the analysts see merchant advertising growth slowing as it has already reached 6% of gross merchandise volume (GMV) in 2024, up from 3.7% in 2020, with expectations for more modest growth going forward. Amazon’s ad revenue may also face cost pressures from high-profile content rights, including anticipated NBA-related expenses in 2025.