Amplitude (NASDAQ:AMPL) has been downgraded to a ‘Neutral’ rating from ‘Buy’ by Bank of America analysts, citing increased execution risk and a weaker-than-previously expected profitability outlook.
The analysts also reduced their price target to $8 from $10
Shares traded hands up 5% at about $6 on Friday. The firm pointed to higher operating expenses tied to Amplitude’s expanded strategy involving Statsig, as well as rising AI inference-related costs, both of which are pressuring margins. Bank of America said these factors are making it more difficult for the company to show a near-term path toward stronger profitability metrics, including Rule-of-40 performance.
The revised outlook now assumes a “Rule-of-19” profile by calendar 2027, combining expected revenue growth of about 12% with a free cash flow margin of 7.4%. This compares to higher-growth infrastructure software peers that the firm estimates at a Rule-of-36 level, reflecting both faster growth and stronger margins. The bank also lowered its fiscal 2026 non-GAAP operating income forecast for Amplitude, citing reduced guidance and increased spending.