CNBC’s Jim Cramer said Monday that Amazon.Com Inc (NASDAQ:AMZN) CEO Andy Jassy’s explanation of the company’s artificial intelligence (AI) spending during its latest earnings call changed how Wall Street views Big Tech’s multibillion-dollar AI investments.
AI Spending Strategy
Cramer said investors had questioned for months whether hyperscalers’ massive AI infrastructure spending would generate meaningful returns.
He said Jassy’s earnings call gave Wall Street the visibility it had been seeking into how those investments are expected to produce long-term cash flow, CNBC reported Monday.
“Until Jassy spoke, the market seemed highly skeptical of how these megacap tech companies were spending money. That’s no longer the case,” Cramer said.
“It was Jassy’s calm, thoughtful presentation that allowed him to raise his capex budget from $200B to $220B and still have Amazon’s stock soar to its biggest one-day gain in over a decade,” Cramer said.
Jassy said Amazon’s upfront AI investments go toward building data centers and equipping them with servers and networking infrastructure. “Once a data center opens with servers plugged in, we start generating significant revenue right away and then get to monetize these data centers for 30-plus years without having to spend that startup capital again,” he said.
Earlier this year, Jassy defended Amazon’s roughly $200B AI investment strategy, saying the company had successfully navigated similar investment cycles during the early expansion of Amazon Web Services and that the current AI opportunity was growing even faster.
Peer Comparison
Cramer contrasted Amazon’s AI strategy with several of its technology peers.
He said Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) raised its capital spending guidance but did not clearly explain how those investments would translate into future returns.”I believe the same numbers explained differently would’ve sent the stock higher, not lower,” Cramer said.
He added that Microsoft Corp (NASDAQ:MSFT) has faced less skepticism because it is already monetizing AI through Azure and Copilot.
Cramer also criticized Meta Platforms Inc. (NASDAQ:META), saying the company has yet to clearly explain how its expanding AI infrastructure investments are expected to generate returns, particularly whether it plans to monetize excess computing capacity. “I was shocked and disappointed that Meta didn’t seem to have a plan,” he said.
Industry Context
The comments build on Cramer’s earlier defense of the AI infrastructure spending boom.
In May, Cramer argued cloud providers were expanding data center capacity to meet existing customer demand rather than building on speculation. He said Amazon, Alphabet and Microsoft could not afford to slow AI infrastructure spending because customers would shift workloads to competitors with greater computing capacity.
Price Action: AMZN gained 4.58% to close at $284.02 on Monday. The shares slipped 1.56% in after-hours trading to $279.60.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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