Amazon layoffs will help, but growth in this one area is what’s needed
Amazon ‘s latest round of layoffs may help the bottom line, but CNBC’s Jim Cramer encouraged investors to keep their eyes on what really matters. That would be Amazon Web Services. The e-commerce and cloud giant said Tuesday it will cut 14,000 corporate jobs, or about 4% of the total corporate and tech workforce, to invest in other higher-priority areas such as generative AI. The company employs roughly 1.5 million people around the world. Most of those positions are warehouse jobs. “The reductions we’re sharing today are a continuation of this work to get even stronger by further reducing bureaucracy, removing layers, and shifting resources to ensure we’re investing in our biggest bets,” Beth Galetti, senior vice president of people experience and technology at Amazon, wrote in a blog post. “The layoffs are good, but it doesn’t matter [for the upcoming quarter] at all,” Jim said Monday on ” Mad Money ,” previewing Amazon’s third-quarter earnings, which are set to release after Thursday’s close. “The stock’s now being graded on whether Amazon Web Services is going to grow the same way as Azure. That’s ridiculous. It’s much bigger than Azure,” Jim reiterated Tuesday on ” Squawk on the Street .” AWS, which is the largest cloud, grew 18% in the second quarter, trailing behind 39% growth for Microsoft ‘s Azure, which is No. 2. ( Alphabet ‘s Google Cloud is third , with Oracle a distant fourth but growing.) Jim estimates Amazon’s cloud unit will deliver 21% revenue growth in Q3, which could be enough to lift the stock and finally break out after months of lagging its tech peers. For years, the market has generally cheered layoff announcements, viewing them as a lift to earnings, but Amazon’s announcement did not move the needle that much, with shares up just over 1.5%. Amazon has gained less than 4% in 2025, making it the worst by far of the “Magnificent Seven” stocks year to date. The S & P 500 has advanced nearly 17% this year. Zooming out, Amazon’s stock performance looks even worse. Since Andy Jassy took over as CEO in July 2021, shares have gained nearly 30%. During that same time frame, the S & P 500 advanced roughly double that, and Microsoft surged 95%. AMZN 5Y mountain AMZN stock 5-year performance. However, Jim said the company’s underperformance under Jassy is neither a reason to sell the stock nor a ding on the CEO’s leadership. Jassy, who took over from Amazon founder Jeff Bezos , has been on a campaign to cut costs across the company over the past few years. Amazon laid off 27,000 employees between 2022 and 2023, and job reductions have continued since then to create a leaner and more efficient business. At the same time, the company has also been ramping up AI investments — just as all the other hyperscalers have been doing. “I am with Jassy,” Jim said, adding he’s sticking with Amazon even though it’s been a megacap laggard. He noted he’s not going to make the same mistake of selling Alphabet. The Club completed Alphabet exit back in March after a stretch of underperformance due to government antitrust headwinds and the threat of AI to Google search. “I’m furious I sold it,” Jim said, looking back at how Alphabet has soared since. “I did it to Alphabet. I’m not going to wreck this one,” he said, referring to Amazon. (See here for a full list of the stocks at 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.
<
