Don't Sweat Amazon's Tariff Impact. Here's Why the Stock Remains a No-Brainer Buy.

Amazon (NASDAQ: AMZN) announced its 2025 first-quarter results following the market close on Thursday. It beat Wall Street's earnings estimates for the first quarter of 2025. The e-commerce and cloud services giant met analysts' Q1 revenue expectations, raking in a whopping $155.7 billion.

But worries about the impact of tariffs hover like a dark cloud above the company's head. However, I don't think investors should sweat Amazon's tariff impact. Here's why the stock remains a no-brainer buy.

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Image source: Amazon.

How Amazon is handling tariffs

Amazon CEO Andy Jassy readily admitted during his company's Q1 earnings call that there's significant uncertainty related to tariffs. He said, "It's hard to tell what's going to happen with tariffs right now. It's hard to tell where they're going to settle and when they're going to settle."

The good news so far, though, is that Amazon hasn't seen any weakening in demand. It hasn't seen average selling prices rise significantly yet, either. Jassy noted that the company has observed some increased buying in certain product categories that could hint that consumers are stocking up to get ahead of tariffs.

What has Amazon done about tariffs to date? Jassy said the company did "some forward buying" with its first-party selling. He also mentioned that some of Amazon's third-party sellers have imported products in advance of tariffs being implemented.

More importantly, though, is what Amazon has been doing even before the Trump administration's tariffs were announced. Jassy said, "[W]e have been diversifying where we produce things over a long period of time."

Amazon's massive selection of products could also help insulate the company to some extent from the negative effects of tariffs as well, according to Jassy. He argued that Amazon is "often able to weather challenging conditions better than others."

Jassy pointed to the company's experience in the COVID-19 pandemic, noting, "Given our really broad selection, low pricing, and speedy delivery, we have emerged from these uncertain eras with more relative market segment share than we started and better set up for the future. I'm optimistic this could happen again."

Focusing on the future

I think investors should share Jassy's focus on the future. And there are several reasons to be upbeat about Amazon's prospects.

For one thing, the company continues to improve its cost structure. It's increasing same-day delivery sites and building out its rural delivery network. Amazon is putting more robots and automation into its facilities. The company is optimizing inventory placement. These initiatives should boost profits going forward.

Advertising is another bright spot for Amazon. Ad revenue soared 19% year over year in Q1 to $13.9 billion. The company believes it has significant growth opportunities ahead from expanding its advertising offerings.

Only a few days ago, Amazon launched the first of its Project Kuiper satellites. More satellites will be put into orbit throughout 2025 with the goal to offer global internet service to customers later this year. The company's Zoox autonomous ride-hailing business is starting testing in Los Angeles, its sixth location.

The most important growth driver for Amazon, though, is Amazon Web Services (AWS). Jassy, as he has several times in the past, stressed that over 85% of global IT spending is still on premises rather than in the cloud. He expects the numbers to flip in the next 10 to 20 years. Thanks to artificial intelligence (AI), AWS could become an even bigger business than originally predicted.

Some might point to other major cloud service providers delivering stronger growth than AWS. However, Jassy argued that AWS has "a meaningfully larger base on the technology infrastructure side than others." He added, "And so it's still -- if you think about 17% year-over-year growth on a $117 billion revenue run rate, still pretty significant growth."

Still a no-brainer buy

Amazon's shares are still down more than 20% below the previous high despite a rebound in recent weeks. Such sell-offs have presented attractive buying opportunities for long-term investors in the past.

Importantly, Amazon's valuation was already looking appealing compared to its historical range before this year's pullback. The stock now trades at a price-to-earnings ratio of 31 -- the lowest level in 16 years.

Amazon is a leader in three of the biggest growth markets on the planet: e-commerce, cloud computing, and AI. It's expanding in other potential high-growth areas as well, including healthcare and robotaxis.

Sure, tariffs could weigh on Amazon's business over the near term. But this stock is still a no-brainer buy for long-term investors.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.