Jim Cramer on Amazon.com, Inc. (AMZN): It’s ‘Making A Comeback’
We recently compiled a list of the Jim Cramer’s Top 10 Bullish Stock Picks. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against Jim Cramer's other bullish stock picks.
In a recent episode of Mad Money, Jim Cramer expressed his enthusiasm for the current market, highlighting a significant historical perspective. He reminded viewers that 20 years ago, Google went public at $85 per share and closed its first day up 18%. While many traders were thrilled by this initial gain, looking back, it was a major missed opportunity. The stock has since delivered a 7,736% return, far exceeding the S&P 500’s return of just over 600%. This example illustrates the potential wealth individual stocks can offer compared to broader indices, especially if you choose wisely.
"Twenty years ago today, Google went public at a split-unadjusted price of $85 per share. On its first day, the stock closed up 18%. Many traders, thrilled by this initial gain, took the profit. In retrospect, this was one of the greatest mistakes of all time. It has since delivered a 7,736% return, compared to the S&P 500's return of slightly more than 600% with dividends. This serves as a reminder of the wealth that individual stocks can generate compared to indices when you choose wisely. And I’m telling you, it’s not that hard if you know how to research. So, I think it's time to reconsider the average approach, at least for today."
Cramer noted that, despite a strong recent performance—with the Dow gaining 237 points, the S&P 500 up 0.97%, and the NASDAQ increasing by 1.39%—the short-term market outlook is more complex. The market is currently on its longest winning streak since November of last year, with 93% of S&P 500 stocks showing gains.
However, he cautioned that the market might be "overbought," as indicated by the Market Edge oscillator, a tool Cramer has relied on since 1987. When the oscillator reaches plus five or higher, it signals that it might be time to sell. Conversely, readings of minus five or lower indicate oversold conditions, suggesting it's a good time to buy.
"Even though it was another good day for the markets. we need to consider both the short-term and long-term outlooks. The short-term setup isn’t as favorable. We’re currently on a significant winning streak, with the market having risen for straight days, the longest streak since November of last year. Impressively, 93% of the S&P 500 stocks are up. "
This follows a Monday when the market dropped sharply due to the Yen carry trade imploding, which led to a wave of forced selling and subsequent panic.
"As I've often said, panic is not a strategy. Since that panic, the market has mostly been trending upward."
Jim Cramer has also expressed concern about the upcoming Justice Department case challenging the search engine giant's role in the advertising exchange market. This legal issue could have a significant negative impact on it, a company that has greatly benefited from this setup. A victory for the Justice Department could be even more damaging than the previous issue with Apple over default search engine payments, which contributed to its monopoly concerns.
According to Cramer, the resilience of tech giants is evident, with strong recoveries even after short-term dips. (see 33 Most Important AI Companies You Should Pay Attention To).
Jim Cramer emphasizes that investing in truly exceptional companies, rather than merely following market indices, usually leads to the best returns. Cramer advises investors to avoid panicking during market fluctuations and to maintain their focus on holding strong companies for long-term success.
"As we move forward, it's important to remember that investing in truly great companies, rather than just following the index, often yields the best returns. The substantial gain from Google over 20 years exemplifies this. Avoiding panic during market turbulence and sticking with strong companies is crucial for long-term success."
Our Methodology
In this article, we reviewed a recent episode of Jim Cramer's Mad Money and highlighted ten stocks that he is optimistic about. We also included information on hedge fund sentiment for each stock and ranked them based on how many hedge funds own each one, starting with the least owned.
At Insider Monkey we are obsessed with 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).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Investors: 308
Jim Cramer noted that, like Amazon.com, Inc. (NASDAQ:AMZN), there was disappointment with recent performance, with concerns about consumer spending slowing down. However, Morgan Stanley recently reported optimism for same-day consumable sales, which are becoming increasingly popular.
"Similar to Amazon, people were disappointed with the last quarter, with a lot of talk about consumers tapping out. Today, Morgan Stanley came out and said there's hope for same-day consumable sales, which are becoming habit-forming. Amazon's making a comeback—up 18 points from where it fell after the setback."
Amazon.com, Inc. (NASDAQ:AMZN) continues to lead in global e-commerce with its wide range of products, efficient logistics, and focus on customer satisfaction. Its cloud computing arm, AWS, drives significant growth due to high demand for cloud services and strong profit margins. Amazon Prime’s growing subscriber base benefits from perks like free shipping, streaming services, and exclusive deals.
Amazon.com, Inc. (NASDAQ:AMZN)’s substantial investment in technology, including artificial intelligence and automation, boosts efficiency and supports innovation. Amazon.com, Inc. (NASDAQ:AMZN)’s diverse revenue sources—advertising, subscription services, and physical retail stores like Whole Foods—help manage risks and provide multiple growth opportunities. With solid financial results, including strong revenue growth, high-profit margins from AWS, and healthy cash flow, Amazon.com, Inc. (NASDAQ:AMZN) is well-positioned for continued expansion and success in both current and new international markets.
Overall AMZN ranks 1st on our list of Jim Cramer's top bullish stock picks. While we acknowledge the potential of AMZN as an investment, 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.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
