Amazon's Web Division Experiences Phenomenal Growth

Jim Cramer praises Amazon's web division, citing its phenomenal growth and impact on the world. He notes that the company is the largest retailer globally and has a strong concentration of capital. Cramer acknowledges the potential of Amazon as an investment but believes AI stocks offer greater upside potential and less downside risk.

Amazon's web division, Amazon Web Services (AWS), continues to be a powerhouse in the tech industry, demonstrating remarkable growth and global impact. As of September 2, 2025, AWS remains the profit engine for Amazon, with annualized revenues exceeding $120 billion [1]. The quarterly results for Q2 2025 show a 17% year-over-year increase in revenue to $30.9 billion, although margins narrowed slightly to 32.9% due to substantial investments in AI infrastructure [1].

AWS's partnership with Anthropic, valued at $183 billion after a $13 billion funding round, further solidifies its position in the AI landscape. This tie-up positions AWS as the backbone for one of the fastest-growing AI companies, with Amazon building three hyperscale data center campuses for Anthropic, deploying hundreds of thousands of Trainium2 accelerators [1]. This strategic move not only reduces reliance on Nvidia GPUs but also captures a significant portion of AI model training demand, potentially driving incremental revenue growth in the billions [1].

Amazon's expansion is not limited to cloud services. Project Kuiper, its satellite internet initiative, has deployed 129 satellites so far, with authorization for over 3,200. The project has secured partnerships with JetBlue for in-flight Wi-Fi and Airbus for integrating Kuiper connectivity into future aircraft [1]. With over 400–500 million households globally lacking broadband access, Amazon aims to tap a massive underserved market while competing with SpaceX’s Starlink [1]. The Kuiper ecosystem could eventually integrate with Amazon Prime subscriptions, creating recurring revenues through hardware terminals and service bundles.

Despite these advancements, Amazon faces challenges. The company's free cash flow fell sharply in the trailing twelve months, down from $53 billion a year earlier to $18.2 billion, due to elevated capital expenditures [1]. High CapEx reduces free cash flow today but reflects an aggressive bet on future market leadership.

Analysts have lifted NASDAQ:AMZN price projections, with models now placing fair value between $253 and $308, compared to earlier estimates of $227–$275 [1]. This adjustment reflects upward revisions in EBITDA growth forecasts from 15.7% to 17.6% CAGR through 2027, despite free cash flow estimates being cut by 18.5% due to elevated CapEx [1]. While free cash flow constraints are a concern, the investment cycle is expected to unlock multi-year revenue streams across AI and satellite services.

Jim Cramer praises Amazon's web division, noting its phenomenal growth and impact on the world. He acknowledges the potential of Amazon as an investment but believes AI stocks offer greater upside potential and less downside risk [2]. While Amazon's web division is a force to be reckoned with, the AI sector, with its massive growth potential, may present more lucrative opportunities for investors.

References:
[1] https://www.tradingnews.com/news/amazon-stock-price-forecast-ai-surge-breakthrough-push-amzn-toward-300-usd
[2] https://finance.yahoo.com/news/ai-spending-could-soar-600-075500827.html