Jim Cramer: Why Amazon is a Long-Term Investment Despite Underperformance

Amazon's Long-Term Investment Thesis

• 💡 Despite Amazon's stock underperforming the S&P 500 since July 2021, Jim Cramer maintains a long-term view, emphasizing that his charitable trust invests for periods longer than CEO Andy Jassy's tenure.
• 🎯 Cramer highlights Amazon Prime as an indispensable and reliable service, a key factor in his continued belief in the stock's future performance.
• 🧠 He acknowledges past criticism but believes Amazon stock will eventually align with his judgment, drawing parallels to his hedge fund days where such underperformance would be unacceptable.

Navigating Market Challenges and Growth

• 🚀 The period under Jassy's leadership included the pandemic, which significantly impacted Amazon but from which the company emerged remarkably.
• ☁️ Amazon Web Services (AWS) faced increased competition from rivals like Microsoft Azure and Google Cloud, yet Cramer anticipates AWS will see an increased growth rate, potentially validating his positive outlook.
• 💰 Recent corporate layoffs of 14,000 workers are seen as a strategic move by Amazon to slim down and conserve cash, a decision Cramer approves of as it aims to increase shareholder value.

Investment Decisions and Lessons Learned

• ⚠️ Cramer reflects on a past mistake with Alphabet (Google), where he sold the stock due to concerns about the Justice Department and AI cannibalization, a decision he now regrets as the stock significantly outperformed.
• 🧩 He learned that a company's core strengths, like Alphabet's diverse businesses (YouTube, Cloud, Waymo) and its ability to innovate synergistically (Gemini with search), often overcome regulatory or competitive fears.
• ✅ This experience reinforces his commitment to holding onto Amazon, vowing not to repeat the mistake of selling a strong company prematurely.

Stock Advice for Investors

• 📈 Regarding ARM Holdings, Cramer advises against chasing the stock after it has already risen, suggesting investors hold their existing position rather than complicating it by buying at a potential high.
• 🏢 For Disney, despite its current lack of traction, Cramer believes there is underlying value and advises sticking with the stock, as someone will eventually unlock that value.