Jim Cramer Admits Mistake on Amazon.com's AI Spending

Jim Cramer admits he was wrong about Amazon.com's (AMZN) AI spending, citing a Morgan Stanley report that suggests the company may be underspending on AI. Despite this, Cramer still acknowledges Amazon's potential as an investment, but believes other AI stocks have greater promise for delivering higher returns with limited downside risk.

In a recent admission, Jim Cramer acknowledged that his earlier assessment of Amazon.com's (AMZN) AI spending was incorrect. This admission came on the heels of a Morgan Stanley report suggesting that the e-commerce giant may be underspending on AI technologies. Despite this, Cramer still sees potential in Amazon as an investment but believes other AI stocks offer greater promise for higher returns with limited downside risk.

According to the Morgan Stanley report, Amazon has been focusing on strategic partnerships and technological advancements, including a key partnership aimed at advancing nuclear technology and the launch of a practical AI guidebook. These initiatives signal a long-term focus on sustainable energy sources and innovation. Amazon's share price has seen a recent 11% move over the last quarter, coinciding with these developments and positive financial projections, including a reported Q2 revenue growth to $168 billion [3].

However, the report also highlights potential industry pressures that may impact margins and profitability. Amazon's forward-looking revenue and earnings projections appear optimistic, with sustained revenue growth estimated at 9.5% annually and earnings forecast at a 15.3% annual increase. Yet, the company's share price of $227.94 indicates a proximate match to analysts' forecasted value, suggesting a potential 13.1% improvement [3].

Cramer's perspective aligns with CFRA's assessment, which upgraded Mobileye (MBLY) to a Strong Buy, citing the potential of robotaxis to drive growth from 2027 onward. CFRA also raised its price target for Mobileye to $21 and boosted its EPS forecasts for 2025, 2026, and 2027. The firm sees Mobileye as an attractive investment for those looking to avoid the drama surrounding Tesla, noting that some AI stocks offer greater upside potential and less downside risk [2].

In conclusion, while Amazon.com continues to demonstrate strong potential as an investment, the market is increasingly focusing on AI stocks with greater upside potential. The recent developments around Amazon's embrace of nuclear technology and AI signal pivotal advancements in its strategic goals, positioning it further along the forefront of innovation. However, the company's AI spending and potential industry pressures must be considered in the broader investment context.

References:
[1] https://seekingalpha.com/news/4488776-marvell-set-to-release-positive-guidance-in-latest-earnings-morgan-stanley
[2] https://www.ainvest.com/news/mobileye-boosted-strong-buy-cfra-robotaxi-advancements-2508/
[3] https://simplywall.st/stocks/us/retail/nasdaq-amzn/amazoncom/news/amazoncom-amzn-partners-to-expand-nuclear-reactor-tech-and-l