‘Patience will be rewarded.’ Here’s why Wall Street is not panicked over Amazon’s earnings slump.

The tone from Wall Street appeared mostly resilient, as Amazon’s stock sold off alongside those of Google parent Alphabet
GOOGL,
-2.75%
and Apple
AAPL,
+2.44%,
which also reported relatively gloomy earnings for the holiday quarter.

“Uncertainty remains, but we believe patience will be rewarded,” said a team of analysts at MoffettNathanson, led by Michael Morton, who kept an outperform rating on Amazon alongside a $117 share-target price.

“The public cloud addressable market has not changed as one of the largest opportunities in all of technology with Amazon the industry leader. As Amazon negotiates larger and longer term deals with customers for price discounts, it will pressure [Amazon Web Services] margins in the near term, but reward the company in the long-term,” he said.

The retail business is also “unassailable and appears to be turning the corner on profitability,” said Morton. But other segments of the business, notably advertising, have likely gotten so big they are getting cyclical and exposed to macro headlines.

Morton also said Amazon’s first-quarter guidance for operating income implies a 200-basis-point drop in operating margins at the midpoint, which seems “greater than historical trends.”

But Morton stood out for not lifting Amazon’s share-price target. Analyst at Jefferies raised theirs to $135 from $125, keeping a buy rating on the stock. “We believe AWS customers are pausing, rather than canceling spend, which suggests a quick turnaround once macro uncertainty subsides,” said a team of analysts led by Brent Thill.

Analysts at Oppenheimer lifted their price target to $135 from $130 , saying Amazon’s ecommerce’s margins showed improvement on the quarter and should benefit from the company’s coming headcount reductions. Amazon announced at the start of January that 18,000 employees would be eliminated globally, adding to 10,000 layoffs announced in December.

Read: Amazon cut jobs in 2022 for the first time since the dot-com bust 20 years ago

And at SIG Susquehanna, Shyam Patil lifted the target for Amazon shares to $150 from $140, blaming disappointing guidance in the first quarter on “difficult macro.”

“While the near term is likely to remain choppy, we continue to view Amazon as a long-term secular grower underpinned by its strong ecommerce, cloud and advertising business,” said Patil, who rates the company positive.

Pulling some more “silver linings” out of the results, and also lifting their price target were analysts at Benchmark. They highlighted “smaller pieces” of commentary from management on margins, operating expenditure and capital expenditure, which “depending on revenue volumes, could lead to a positive [free cash flow] result for the year.” That’s an outcome analyst Daniel Kurnos said he didn’t see possible previously.

“Therefore, while we do anticipate some weakness today, albeit not the clearing event many were hoping for unless warnings from the other major tech companies weigh incrementally on the market, we are raising our target price to $130 [from $125] on a slightly higher multiple as we believe the value proposition has incrementally improved,” he said. Benchmark rates Amazon buy.

And from Evercore, came the assessment that investors need to sit tight and wait for the macroeconomy to get better and efficiency gains to kick in. A team led by Mark Mahaney said that all four segments of the company, North American retail, international retail, AWS and advertising saw “sharply decelerating growth”, the first of those still gained share.

“Amazon clearly has its work cut out for it in terms of managing expenses in a deteriorating demand environment,” said Mark Mahaney.

“Amazon has a clear track record of operating through economic cycles and has been belt-tightening since [the first quarter of last year], so investors can have some comfort that [the company] will defend the bottom line,” he said, maintaining an outperform rating and shifting his share-price target up to $160 from $150.

Investor patience, meanwhile, may be a whole other ballgame.