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Amazon may face heat from margins, competition

After a breakout 2015, is Amazon losing its luster? While its stock price is likely to tick higher, narrowing margins could weigh on investors, analysts told CNBC's "Squawk on the Street" on Monday.

At $593.19, shares of the tech-driven retailer are 12 percent lower so far this year after a January earnings report sent the stock tumbling. Now the company's dominance in cloud computing is facing more competition as industry laggard Google poaches customers.

Raymond James internet analyst Aaron Kessler downgraded the stock last month, calling for a price target of $655, down from more than $700.

"We're still positive, but I would say we see the pace of margin expansion to slow," Kessler said Monday.

While Amazon's disruption of the retail and cloud space has been "phenomenal," there are concerns, said Bob Peck, internet equity analyst at SunTrust Robinson Humphrey, who has a price target of $600 on the stock.

"[Amazon CEO] Jeff Bezos has recently given you several quarters of margin expansion, letting it flow to the bottom line," Peck said. "Investors love to see that. If you look back historically, he then tends to reinvest ... you'll see margins under pressure as we go forward here."

Peck values Amazon's cloud business, Amazon Web Services, at $100 billion and said his research shows that the business is positioned well in spite of competition. Still, Google and Facebook are Peck's top stock picks in the internet sector, while Kessler recently upgraded Twitter.

Amazon did not immediately respond to CNBC's request for comment.

"[Amazon is] going to see a little more competition on the AWS side, so I think just the perception of more competition could be a concern," Kessler said.