** Amazon.com AMZN.O on Thursday reported first-quarter cloud revenue growth and forecast operating income below estimates, disappointing investors

** Shares down 1.37% at $187.59 in premarket trading

POTENTIAL GROWTH DESPITE CHALLENGES

** BofA Global Research ("buy," PO: $230) says a wide selection of third-party products, strategic first-party purchases and a shift towards essentials should help Amazon outperform the retail sector if inventory conditions worsen

** RBC Capital Markets ("outperform," PT: $230) says there are still unknown tariff-related challenges to overcome, including inventory issues and potential loss of advertising revenue due to lower volume

** "We come away marginally more constructive on the prospect for another go at the AWS acceleration story and with AMZN's seller density carrying similar scarcity value to a META or GOOGL," says RBC

** Morgan Stanley ("overweight," PT: $250) says AMZN will emerge stronger after this period, with its logistics leadership and AI advancements positioning it for retail market share gains

** But visibility on costs for delivering a top experience for buyers and sellers in the second half of 2025 and 2026 remains low, says the brokerage

** Wedbush ("outperform," PT: $235) sees several ways for Amazon to sustainably improve its margins, including better fulfillment processes and a shift towards higher-margin advertising and AWS revenues

(Reporting by Akriti Shah in Bengaluru)

((akriti.shah@thomsonreuters.com))