Why Jim Cramer’s "Buy, Buy, Buy" Call on Amazon Makes Sense in 2025
18min read Jim Cramer’s recent "Buy, Buy, Buy" recommendation on amazon.com (NASDAQ:AMZN) has sparked debate, but a closer look at the company’s fundamentals reveals a compelling case for long-term investors. Despite short-term volatility tied to elevated capital expenditures (CapEx) and cautious Q1 2025 guidance, Amazon’s strategic moves in cloud computing, AI, and operational efficiency position it as a prime beneficiary of secular tech trends. Let’s dissect the rationale behind Cramer’s call.
AWS: The Engine of Growth
At the heart of Amazon’s success lies its cloud computing arm, Amazon Web Services (AWS). In Q4 2024, AWS revenue grew 19% year-over-year to $23.4 billion, maintaining its dominance in the cloud market. This segment’s operating income surged 61% to $21.2 billion, driven by margin improvements from data center optimizations and cost efficiencies.
Ask Aime: "Is Amazon's stock a buy, despite cautious Q1 guidance?"
Cramer emphasizes that AWS’s leadership is not just about scale but also innovation. By developing custom AI chips like the Tranium 2 and Graviton, Amazon reduces reliance on third-party hardware (e.g., NVIDIA GPUs), lowering costs and improving performance for AI workloads. CEO Andy Jassy’s vision—framing AI as the "biggest opportunity since cloud computing"—aligns with Cramer’s belief that AWS will capitalize on the AI boom.
Ask Aime: Why is Amazon a "Buy, Buy, Buy" stock now, despite short-term volatility?
AI Investments: A Strategic Hedge Against Volatility
Amazon’s $26.3 billion in Q4 CapEx—projected to exceed $100 billion in 2025—has spooked short-term traders. However, Cramer views this as a strategic bet on AI’s long-term potential. The company is investing in AI silicon, data centers, and software tools to serve enterprises deploying generative AI applications.
While near-term profits may take a hit, the payoff is clear: AWS can capture a larger slice of the AI-driven cloud spend boom. As Jassy noted, "customers will be happy in the medium to long term with our investments."
Cost Discipline and Margin Expansion
Amazon’s operational focus has yielded tangible results. By regionalizing its U.S. logistics network, the company cut delivery times and reduced the "cost to serve" customers for the second year in a row. Management aims to repeat this cost reduction in 2025, boosting margins further.
The e-commerce segment’s efficiency is critical. Even as competitors like Walmart and Target grapple with margin pressures, Amazon’s scale and automation (e.g., AI-driven inventory management) allow it to maintain pricing power.
Institutional and Analyst Backing
Hedge funds and analysts are rallying behind Amazon. As of Q4 2024, 339 hedge funds held Amazon stock, including Bridgewater Associates and Balyasny Asset Management, which increased their stakes significantly. Analysts like Wedbush and Scotiabank have raised price targets to $280 and $306, respectively, citing AWS’s growth and margin upside.
Addressing Near-Term Concerns
The Q1 2025 guidance—which projected $151–155.5 billion in revenue (midpoint below estimates)—sparked a 4% post-earnings dip. Cramer dismisses this as noise, pointing to foreign exchange headwinds and one-time costs. Historically, Amazon has beaten its own forecasts, and AWS’s recurring revenue model ensures stability.
Conclusion: A "Buy and Hold" Opportunity
Amazon’s valuation—trading at 23x trailing earnings—is reasonable given its growth profile. With AWS at 19% revenue growth, advertising hitting a $69 billion annual run rate, and margin improvements driven by AI, the company is well-positioned to outperform in 2025.
Cramer’s "Buy, Buy, Buy" call is not a sprint but a marathon. The company’s scale, tech leadership, and cost discipline make it a defensive play in volatile markets, insulated from trade wars and macroeconomic headwinds. As Jassy’s AI vision materializes, Amazon’s stock could re-rate higher, rewarding patient investors.
In sum, Amazon’s blend of secular growth drivers, institutional support, and margin resilience justifies its "buy" rating. The path may have short-term bumps, but the destination looks promising.
