CNBC’s Jim Cramer said on Monday that Amazon CEO Andy Jassy’s earnings call changed how Wall Street views massive artificial intelligence investments.
“Until Jassy spoke, the market seemed highly skeptical of how these megacap tech companies were spending money,” the “Mad Money” host said. “That’s no longer the case.”
For months, investors had questioned whether the hyperscalers’ enormous spending on the AI buildout would ever translate into meaningful returns. Cramer said Jassy’s explanation on Amazon’s earnings call finally gave Wall Street the “line of sight” it needed to understand how those investments will pay off.
“It was Jassy’s calm, thoughtful presentation that allowed him to raise his capex budget from $200 billion to $220 billion and still have Amazon’s stock soar to its biggest one-day gain in over a decade,” Cramer said.
Cramer said Jassy won investors over by explaining not only how much Amazon is spending, but how that spending will translate into decades of cash flow. Jassy said the upfront investment goes toward building data centers and outfitting them with servers and networking equipment. Once those facilities come online, however, they begin generating revenue almost immediately and can be monetized for decades.
“Once a data center opens with servers plugged in,” Jassy said, “we start generating significant revenue right away and then get to monetize these data centers for 30-plus years without having to spend that start up capital again.”
The contrast with some of Amazon’s peers, Cramer argued, could not have been clearer.
Alphabet also raised its capital spending guidance, but he said its shares fell after management failed to adequately 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.
Microsoft, meanwhile, avoided much of the skepticism because the company remains free cash flow positive and is already monetizing its AI investments through its Azure cloud service and more subscriptions to its AI assistant Copilot, Cramer said.
Meta drew the sharpest criticism from Cramer. While the company continues to aggressively expand its AI infrastructure, he said management offered little explanation for how it plans to generate returns from that spending, especially a lack of clarity on whether the company will ever rent out excess compute capacity.
“I was shocked and disappointed that Meta didn’t seem to have a plan,” he said.
