(Reuters] – Amazon.com Inc. was given an “underperform” rating on Wednesday by BNP Paribas. Exane, a French brokerage said that Amazon.com Inc. faces a tough ride ahead because of rising inflation and higher costs.

Analyst Stefan Slowinski said investments during the COVID-19 pandemic to build fulfillment centers for faster deliveries and employee bonuses to keep its warehouses staffed in a tight U.S. labor market may eat into the company’s margins.

His comments included that capital expenditures could rise in the teens and set a price goal of $2,800.

Amazon shares dropped about 1% in the early trades in weaker markets, trading at $3354

According to Refinitiv data, Amazon is being rated by 20 brokerages (strong buy), 36 (“buy”) and one (“hold”) among the total 58. Median price target: $4,000.

Amazon saw a boom in popularity during the pandemic, when consumers relied heavily on online shopping to purchase everyday necessities. However, these shoppers now return to shops.

Customers also reduce discretionary spending during an inflationary environment. This is at a moment when raw material, procurement and shipping costs are increasing for businesses.

Slowinski stated that while margin expansion may be possible, the consumer is clearly under pressure due to high inflation. Amazon has already increased prices for their customers through their Prime pricing.”

He stated that Amazon will not increase the prices of many products in an effort to meet inflation. However, he said it would take some damage.

According to him, the company would have to spend capital on its cloud business in order to grow by 30% within a market that is competitive.

After falling as low as 20% earlier in the year, Tuesday’s closing close saw the stock rise 1.6%.

Alphabet and Microsoft, which are members of the $1 trillion club or more, have seen their shares drop by 6% and 1.6%, respectively. Apple (NASDAQ) Inc has increased 0.8% while Tesla (NASDAQ) Inc has grown 4%.