Jim Cramer says Amazon is a buy on 2025 underperformance for this key reason
Jim Cramer says investors better act fast while Amazon stock is still on the sale rack. BMO Capital Markets’ decision to raise its estimates on Amazon’s cloud unit is a “clarion call to buy” the stalled stock, Jim Cramer said during Tuesday’s Morning Meeting for Club members. Amazon has been the worst-performing “Magnificent Seven” stock this year due to Amazon Web Services (AWS) growth concerns, despite a step in the right direction in the third quarter. In fact, AWS reacceleration is one of the central reasons why the Investing Club sees Amazon as one of five stocks set to bounce in 2026. Analysts at BMO are now forecasting Amazon Web Services’ fiscal 2026 first-quarter revenue growth of 24%, up from their previous estimate of 23%. Following discussions with former AWS employees, BMO sees upside to Amazon’s high-margin cloud business, citing “meaningful acceleration in customer cloud commitments” in the months ahead. According to FactSet, AWS is expected to grow 22.4% in fiscal Q1 following an estimated 21% increase in Q4. Cloud computing revenue increased 20.2% year-over year in Q3 — growing at levels not since 2022 — and beating estimates at the time for an 18.1% advance. The stock surged nearly 14% in the two sessions following its late Oct. 30 earnings print and closed at a record high of $254 on Nov. 3. Shares have since dropped back down to pre-earnings release levels around $222. Jim has not been deterred. “If you could get 30 times earnings next year’s earnings with some certainty about AWS growing, then [Amazon CEO Andy Jassy] is going to get his way out of this thing. It’s going to be terrific,” he said on ” Squawk on the Street ” on Tuesday. Amazon is trading around 28 times fiscal 2026 earnings per share estimates, according to FactSet. AMZN YTD mountain AMZN stock performance year-to-date. Another factor BMO called out as a supporter of AWS growth is the availability of Anthropic’s artificial intelligence Claude model — preferred among developers. Claude is a large language model (LLM) that’s available on AWS. The analysts said that Amazon’s $8 billion investment in Anthropic positions AWS to stay on top in the cloud. In addition to raising estimates, BMO increased its Amazon price target by $3 per share to $303 and reiterated its outperform buy rating. The Club has a $275 price target on Amazon and our buy-equivalent 1 rating . (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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