We recently published a list of Jim Cramer is Talking About These 10 Stocks Amid Global Selloff. Since Amazon.com Inc (NASDAQ:AMZN) ranks 1st on the list, it deserves a deeper look.
Jim Cramer in his latest program on CNBC talked about the brutal market selloff of Monday and said days like these could make you “cry yourself to sleep.” Cramer said that this “nasty” selloff was expected.
“It’s exactly what you’d expect at this point in the rate cycle, the point where the Fed is about to start cutting rates to bolster the economy. But the economy is going down,” Cramer said.
Cramer said that the Monday selloff was “vicious enough” to make any investor think why they should stay in the market, but that’s exactly “what you have to do.” He thinks the latest decline is a buying opportunity for long-term investors.
Jim Cramer said that the selloff started because money managers who were borrowing money from Japan to invest in US stocks were caught with their “pants down” when Japan increased interest rates. As a result, these funds were forced to sell their stocks. He thinks it’s not possible to call a bottom on this decline yet “until we know these sellers are done unwinding their trades.”
Cramer said that another key reason why investors were selling on Monday was the notion that the Fed is late on cutting rates. But Cramer said a 25 bps rate cut wouldn’t have mattered a lot and if Fed Chair Jerome Powell sees there is a need for an urgent rate cut, he’d do it.
“He’s got horse sense,” Cramer said.
Jim Cramer said there are no “safe havens” in tech and while he reiterated his bullish view on some notable tech stocks, he advised investors to be ready for “pain” in the near term if they want to invest in technology.
“If you can’t take the pain, then get the heck out of it.”
For this article we watched several latest programs of Jim Cramer and picked 10 important stocks he’s talking about. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 302
Jim Cramer said in a latest program that Amazon.com Inc (NASDAQ:AMZN) results were “imperfect.” Sales of Amazon were “light” but AWS showed strengths. Cramer thinks Amazon’s revenue guidance was weak but the company has a history of guiding conservatively.
“Amazon has got to keep on spending on computing to keep up with Alphabet and more importantly Meta and Microsoft,” Cramer said.
Amazon.com Inc (NASDAQ:AMZN) shares fell as investors digested the company’s latest quarterly report where revenue missed estimates and guidance came in soft despite AWS growth.
AWS’s revenue growth accelerated from 17.2% in Q1 to 18.8% in Q2, driven by a shift from on-premises infrastructure to cloud solutions and increasing demand for AI capabilities. Amazon.com Inc (NASDAQ:AMZN) advertising segment added over $2 billion in revenue year-over-year, indicating significant potential in video advertising and opportunities within Prime Video offerings.
Like other tech companies, fears stemming from high CapEX are keeping investors on the sidelines. Amazon.com Inc (NASDAQ:AMZN) spending is expected to rise amid broadband project Project Kuiper and AI growth. Investors are still figuring out whether AI monetization and ROI will come anytime soon. Amazon.com Inc (NASDAQ:AMZN) is also facing a slowdown in consumer spending, especially for higher-ticket items like electronics and computers.
Based on Amazon.com Inc (NASDAQ:AMZN) Q3 guidance, its revenue growth would be 11%. The stock is trading 35x its fiscal 2025 earnings estimates set by Wall Street. This shows the stock is fairly priced and investors looking for strong growth could look elsewhere.
Diamond Hill Select Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”
While we acknowledge the potential of Amazon.com Inc (NASDAQ:AMZN), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Overall, Amazon.com Inc (NASDAQ:AMZN) ranks 1st on Insider Monkey’s list titled Jim Cramer is Talking About These 10 Stocks Amid Global Selloff. While we acknowledge the potential of Amazon.com Inc (NASDAQ:AMZN), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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