Amazon Stock: Jim Cramer Thinks Market Isn't Giving Company Enough Credit

Jim Cramer thinks Amazon stock (AMZN) is undervalued, despite strong earnings. He believes the company has the resources to attract AI developers back and cites a recent partnership with OpenAI as evidence. Cramer argues that investors are unfairly dismissing Amazon, and Wall Street analysts have a Strong Buy consensus rating with an average price target of $264.21, implying 18.4% upside potential.

Amazon's stock (AMZN) has been under pressure recently, despite strong earnings and a strategic partnership with OpenAI. Jim Cramer, a prominent financial analyst, believes the stock is undervalued and has the potential to attract AI developers back to the platform. Cramer's optimism is reflected in Wall Street's Strong Buy consensus rating, with an average price target of $264.21, implying an 18.4% upside potential [1].

Amazon's second quarter results were mixed, with sales and earnings beating expectations. However, investors were disappointed with the growth pace of Amazon Web Services (AWS), which grew more slowly than Microsoft Azure and Google Cloud. AWS's slower growth stems from its lack of integrated proprietary AI models and a strategy requiring high technical expertise, hindering adoption in the generative AI age [2].

AWS's slower growth has led to skepticism among analysts regarding Amazon's ability to compete effectively in AI. Despite CEO Andy Jassy's explanations, investors are concerned about AWS's strategic shortcomings. Jassy's responses during the earnings call did not directly address the question of AWS's relatively slow growth, which has raised eyebrows among investors [2].

To grow faster, Jassy ought to consider three possible strategies: accelerating the development of integrated AI solutions, forming partnerships to gain access to more capacity, and restructuring AWS and enhancing transparency. However, these recommendations may be difficult to implement and may not result in new services that deliver more value to customers than those from faster-growing rivals [2].

Cramer believes that investors are unfairly dismissing Amazon and that the company has the resources to attract AI developers back. He cites the recent partnership with OpenAI as evidence of Amazon's commitment to AI. The partnership, which involves integrating OpenAI's models into Amazon's services, is seen as a significant step towards competing with Microsoft and Google in the AI cloud market [1].

Despite the mixed results and skepticism, analysts see Amazon stock as slightly undervalued. Of the 52 analysts who cover Amazon, the stock has 9.2% upside based on an average price target of $255.72, according to Zacks [2].

Unless AWS' revenue growth and operating profit accelerate, that modest gain could prove difficult to achieve. However, with the right strategies and execution, Amazon could potentially attract more AI developers and investors, driving the stock price higher.

References:
[1] https://www.forbes.com/sites/petercohan/2025/08/03/amazon-stock-falls-8-why-jassy-to-dos-why-to-skip-amzn-shares/
[2] https://www.forbes.com/sites/petercohan/2025/08/03/amazon-stock-falls-8-why-jassy-to-dos-why-to-skip-amzn-shares/