In a surprising twist, Amazon.com Inc (NASDAQ:AMZN) stock has been downgraded by Wells Fargo & Co (NYSE:WFC) from overweight to equal weight, raising eyebrows in the investment community.

Wells Fargo analyst Ken Gawrelski expressed concerns over the retail giant's growth trajectory, particularly highlighting the intensifying competition from Walmart Inc (NYSE:WMT) and the likelihood that Amazon's cloud computing revenue won't fully offset its margin pressures.

Amazon Stock: A Bearish Trend Unfolding

Currently, Amazon's stock sits at $182.47, up 21.86% year-to-date and a notable 42.45% over the past year. However, the technical indicators tell a different story.

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With the share price falling below its five-day, 20-day and 50-day exponential moving averages, the trend is classified as strongly bearish. Amazon stock is experiencing significant selling pressure, suggesting the potential for future declines.

• The eight-day simple moving average stands at $184.49, signaling a bearish outlook.
• The 20-day SMA is at $187.26, further reinforcing the negative sentiment.
• While the 50-day SMA at $179.21 and the 200-day SMA at $177.27 present bullish signals, they cannot mask the overall negative outlook.

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Additionally, the Moving Average Convergence Divergence (MACD) indicator shows a value of 0.82, suggesting bullish momentum, but the Relative Strength Index (RSI) of 47.38, and declining, indicates that Amazon stock may soon be in the oversold territory.

The Bollinger Bands also hint at a bearish signal, with Amazon stock now having entered the lower bearish band.

Wells Fargo Skeptical On Visibility, Potential Headwinds

Wells Fargo's downgrade marks a rare moment of skepticism toward Amazon, with Gawrelski stating, "We are selling our 7.6% AMZN position," citing "limited visibility into further positive estimate revisions." This reflects a cautious approach as the firm reassesses its strategy in light of potential headwinds.

Since Amazon's reintroduction into Wells Fargo's portfolio in July 2023, the stock has shown impressive gains of 40%, outpacing the S&P 500's 31% increase.

However, with this downgrade, analysts and investors alike are wondering if the e-commerce giant can maintain its momentum against mounting competition and shifting market dynamics.

The Way Ahead?

Wells Fargo's downgrade of Amazon serves as a warning signal for investors.

With bearish technical indicators and growth concerns looming large, the stock's future may be less certain than it once appeared.

Those holding Amazon stock might want to stay alert — especially as competition heats up and market dynamics evolve.

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