Cramer said Andy Jassy's earnings call gave investors 'line of sight' on AI returns, contrasting Amazon's stock surge with Alphabet's drop, Microsoft's cash flow, and Meta's lack of plan.
Wall Street's skepticism about Big Tech's AI spending ended last week, Jim Cramer said Monday, after Amazon CEO Andy Jassy explained how the company will monetize its data centers for decades.
"Until Jassy spoke, the market seemed highly skeptical of how these megacap tech companies were spending money," the "Mad Money" host said. "That's no longer the case."
Jassy raised Amazon's capital expenditure budget to $220 billion from $200 billion on the company's earnings call. Amazon shares posted their biggest one-day gain in over a decade. Cramer said Jassy gave investors the "line of sight" they needed.
"It was Jassy's calm, thoughtful presentation that allowed him to raise his capex budget from $200 billion to $220 billion and still have Amazon's stock soar," Cramer said.
Jassy explained that upfront spending goes toward building data centers and outfitting them with servers and networking equipment. Once those facilities come online, they begin generating revenue almost immediately and can be monetized for decades, he said. "We start generating significant revenue right away and then get to monetize these data centers for 30-plus years without having to spend that start up capital again," Jassy said.
Cramer contrasted Amazon's approach with Alphabet's. Alphabet also raised its capital spending guidance. Its shares fell, however, because management failed to explain how those investments would translate into future returns, Cramer said. "I believe the same numbers explained differently would've sent the stock higher, not lower," he said.
Microsoft avoided much of the skepticism, Cramer said. The company remains free cash flow positive and is already monetizing AI investments through Azure cloud service and Copilot subscriptions. Microsoft shares rose 4.93% on Monday, giving it an Alpha Score of 70 out of 100, according to AlphaScala data.
Meta drew the sharpest criticism from Cramer. The company continued to aggressively expand its AI infrastructure. Cramer said management offered little explanation for how it plans to generate returns from that spending, especially a lack of clarity on whether Meta will ever rent out excess compute capacity. "I was shocked and disappointed that Meta didn't seem to have a plan," he said.
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