With the onset of earnings season, Morgan Stanley analyst Morgan Nowak gave an overall bullish assessment of Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN) but warned that both companies, as well as the tech sector in general, could face profit pressures due to higher costs.

As a result, Nowak told CNBC that earnings estimates in the tech space “don’t generally look highly beatable.”

“We see margin risks on Alphabet because of hiring over the last couple years. We still see margin risk at Amazon as they are growing into their over build and this growing AWS situation”, he said.

Amid rising recession risk, Novak thinks that Amazon should focus on core retail profitability by better utilizing all the warehouses they built in 2021 and 2022. He believes these steps would allow for efficient handling of its overall logistics business as e-commerce grows over the course of the year.

Elsewhere in the tech segment, the analyst has an equal weight rating on Meta (META).

Looking at the stock action, AMZN lost around 40% of its value in the past 12 months. Google parent Alphabet (GOOG) (GOOGL) has retreated around 35% over the same time span. In Friday’s intraday action, AMZN rose 3.2% and GOOGL climbed 0.5%.

With another perspective on the tech giants, Seeking Alpha contributor Deep Tech Insights says that technicals and valuation indicates a buying opportunity in Alphabet.

For more Amazon, see why fellow SA contributor Stephen Frampton assumes that “Amazon will get back on its feet, but not much more”.