Amazon.com, Inc. (AMZN) Evaluating ROI of AI GPU Investment, Says Jim Cramer

Jim Cramer believes Amazon.com is figuring out the return on investment for its AI GPU investment, potentially focusing on cost and performance rather than just performance. He notes that the company's cloud business has been criticized for using in-house Trainium AI chips instead of NVIDIA GPUs. However, Cramer thinks CEO Andy Jassy was right to prioritize cost and performance. Amazon's eCommerce business remains a key focus for the company.

Amazon.com, Inc. (AMZN) is making significant strides in its AI-powered shopping experiences, potentially unlocking new growth avenues for the retail behemoth. The company's latest innovation, Lens Live, launched this week for tens of millions of iOS users, enabling real-time product matching through mobile cameras while integrating with Rufus, Amazon's AI shopping assistant that analyzes billions of products instantaneously [1]. This initiative is part of Amazon's broader strategy to leverage AI to enhance its ecommerce platform.

Amazon's aggressive push into AI comes as the company reported robust second-quarter 2025 results, with revenues climbing 13% year over year to $167.7 billion, surpassing expectations. Notably, advertising revenues surged 23% to $15.69 billion, demonstrating how AI-enhanced product discovery drives monetization [1]. These AI capabilities extend beyond visual search. Amazon's Interests feature uses conversational language to curate personalized product selections, while Hear the Highlights synthesizes reviews into audio summaries. The experimental Buy for Me feature ventures further, using agentic AI to purchase items from third-party sites when Amazon lacks inventory, potentially capturing additional ecommerce market share [1].

Jim Cramer believes that Amazon is figuring out the return on investment for its AI GPU investment, potentially focusing on cost and performance rather than just performance. He notes that the company's cloud business has been criticized for using in-house Trainium AI chips instead of NVIDIA GPUs. However, Cramer thinks CEO Andy Jassy was right to prioritize cost and performance [2]. Amazon's eCommerce business remains a key focus for the company.

The investment appears justified as Amazon commits up to $100 billion in capital expenditures for 2025, primarily for AI infrastructure. With operating income reaching $19.2 billion in the second quarter, up from $14.7 billion year over year, the company maintains financial flexibility to fund these innovations [1]. As competitors Microsoft Azure and Google Cloud accelerate their AI offerings, Amazon's consumer-facing AI tools could differentiate its retail business while AWS faces intensifying cloud competition.

Rivals Race to Match AI Shopping Innovation
While Amazon advances its AI shopping tools, competitors Walmart WMT and Alibaba BABA are pursuing similar strategies with varying success. Walmart recently expanded its AI-powered search capabilities and virtual assistant features, though Walmart's implementation remains primarily text-based, lacking the visual recognition sophistication of Amazon's Lens Live. Walmart's ecommerce revenue growth of approximately 21% suggests these investments are gaining traction [1]. Meanwhile, Alibaba has deployed AI shopping assistants across its Taobao and Tmall platforms, with Alibaba's cloud division developing proprietary models for personalized recommendations. Alibaba's approach emphasizes social commerce integration, differentiating from Amazon's product-discovery focus. However, both Walmart and Alibaba trail Amazon's scale of AI investment, highlighting the capital-intensive nature of these technological transformations [1].

AMZN’s Share Price Performance, Valuation & Estimates
AMZN shares have gained 2.7% in the year-to-date period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 12% and 8.1%, respectively [1]. From a valuation standpoint, AMZN stock appears overvalued, trading at a forward 12-month Price/Sales ratio of 3.18X, higher than the industry’s 2.3X. AMZN has a Value Score of D [1]. The Zacks Consensus Estimate for AMZN’s 2025 earnings is pegged at $6.73 per share, up by 1.2% over the past 30 days. This indicates a 21.7% increase from the figure reported in the year-ago quarter [1].

References:
[1] https://www.nasdaq.com/articles/amazons-ai-features-boost-shopping-more-upside-ecommerce-giant
[2] https://www.theglobeandmail.com/investing/markets/stocks/AMZN/pressreleases/34572635/amazons-ai-features-boost-shopping-more-upside-for-ecommerce-giant/