Analysts say buy Amazon for the long term, despite recession concerns and slowing AWS growth

Published Fri, Feb 3 20238:10 AM EST

One thing is certain from Amazon 's earnings results: No one is immune to ongoing macroeconomic pressures. But even with these near-term headwinds, analysts remain confident in the long-term thesis for the e-commerce giant and its growth trajectory. The results from Amazon come on the heels of a difficult 2022 that saw the e-commerce bellwether shed roughly half its value and post its slowest year of growth . Shares dipped more than 4% before the bell Friday as light first-quarter guidance eclipsed a better-than-expected overall revenue print . At the same time, revenue for its Amazon Web Services division fell short of Wall Street's estimates and showed slowing sales growth as business spending dwindles. While all business areas showed decelerating growth, many analysts expressed confidence in the company's ability to weather the macro storm and come out intact long-term. "While the next few quarters will likely remain volatile as an output of macroeconomic volatility, the long-term narratives from Amazon and a compelling multi-year risk/reward should appeal to investors," wrote Goldman Sachs' Eric Sheridan in a Friday note. AMZN 1D mountain Amazon shares fell 4% before the bell Evercore ISI's Mark Mahaney highlighted the 18,000-employee layoffs and 3.6% operating margin in the fourth quarter as evidence of Amazon's capabilities. He also reiterated his view of the company as the "strongest, most successfully diversified company" within the firm's coverage space. While the company has its "work cut out for it," Mahaney noted that "AMZN has a clear track record of operating through economic cycles and has been belt tightening since Q1:22, so investors can have some comfort that AMZN will defend the bottom line." Moderating growth within the company's cloud unit marked one of the biggest concerns for analysts, but nowhere near a shock. Competitors across the board have warned of slowing cloud and IT spending as clients pullback budgets. Revenue growth came in at 20% for the quarter, and below the already slow 27.5% growth rate the company experienced in third quarter. Largely expecting the growth slowdown, Bernstein's Mark Shmulik posited that the decline may signal that AWS is in a bottoming process, while Bank of America's Justin Post said the long-term trajectory for cloud is "bent and not broken." Goldman's Sheridan said AWS should benefit long term from the changing needs of enterprise customers. Accelerating growth in Amazon's retail business, including a return to positive operating income in North America, should help offset some pressures from its AWS business, noted JPMorgan's Doug Anmuth. "The company still has its challenges - we're still debating retail margins, content investment levels, the international strategy, and where the floor is on AWS, but our conviction level in seeing the OI inflection this year has come up," said Bernstein's Shmulik. "And that's all that matters." — CNBC's Michael Bloom contributed reporting