nvidia-stock-pick-favorite-july-2026" title="Jim Cramer Picks Nvidia as Top Stock, Defying Skepticism">Jim Cramer stated that Amazon.com Inc. is being unfairly punished by markets, as reported by finance.yahoo.com on July 3. The stock traded at $242.67 as of 00:37 UTC today, posting a daily gain of 1.82% within a session range of $241.08 to $246.72. Cramer's defense contrasts with a period of relative underperformance for the e-commerce and cloud giant amidst intense sector competition.
Context — why this matters now
The commentary emerges as Amazon contends with heightened scrutiny over its core profit drivers. Amazon Web Services faces escalating competition from Microsoft Azure and Google Cloud in the generative AI infrastructure race, potentially threatening its high-margin revenue segment. Concurrently, the company's massive retail operations are navigating a complex consumer spending environment characterized by inflationary pressures. The last significant re-rating for Amazon occurred in late 2023 following deep cost-cutting measures that propelled the stock over 80% for the year.
Current macro conditions add pressure, with the 10-year Treasury yield hovering near 4.3%, elevating discount rates for future growth projections. The technology-heavy Nasdaq Composite has advanced approximately 18% year-to-date, creating a performance gap for several megacap constituents. Cramer's argument suggests markets are overlooking Amazon's entrenched competitive advantages and cash flow generation capacity during this transitional phase.
Data — what the numbers show
Amazon's stock performance reveals a nuanced picture compared to broad market indices and direct peers. The share price of $242.67 represents a modest recovery from recent lows but remains below all-time highs above $380 reached during the 2021 market peak.
| Metric | Value | Comparison |
|---|
| AMZN YTD Performance | +12% | vs. Nasdaq +18% |
| Market Capitalization | ~$1.25 trillion | |
| 52-Week Range | $141.76 - $289.48 | |
AWS revenue growth has decelerated from the mid-30% range in 2022 to approximately 13-15% in recent quarters, though operating margins for the division remain above 30%. The company's advertising business has emerged as a significant growth driver, with sales increasing 24% year-over-year to $11.8 billion last quarter. These fundamentals contrast with more concentrated AI pure-plays that have captured greater investor enthusiasm despite lower absolute revenue.
Analysis — what it means for markets / sectors / tickers
The disagreement between celebrity analyst perspective and market pricing reflects broader sector rotation dynamics. Companies with more concentrated AI exposure, such as NVIDIA and Super Micro Computer, have significantly outperformed diversified tech giants year-to-date. Within e-commerce, Amazon maintains dominant market share but faces renewed competition from brick-and-mortar retailers like Walmart enhancing their digital platforms.
A counter-argument suggests Amazon's valuation already accurately reflects its growth trajectory, particularly given the capital intensity of both its retail logistics network and AI infrastructure investments. The stock trades at approximately 35x forward earnings, a premium to the S&P 500's 20x multiple but a discount to its 5-year average of 55x. Institutional flow data indicates mixed positioning, with some hedge funds reducing exposure while long-only funds maintain overweight positions.
Second-order effects include potential pressure on cloud-computing suppliers like Snowflake and Datadog if enterprise spending consolidation continues. Conversely, logistics partners including FedEx and UPS could benefit from sustained volume growth in Amazon's delivery network despite internal shipping expansion.
Outlook — what to watch next
Amazon's second-quarter earnings report on July 25 represents the immediate catalyst for resolving the valuation disconnect. Investors will scrutinize AWS revenue acceleration rates and operating margin guidance for the cloud division. Management commentary on AI monetization timelines for services like Bedrock and Trainium will be particularly significant for sentiment.
Technical levels suggest immediate resistance at the 50-day moving average near $248, with stronger resistance at the $260 level that capped advances in April. Support appears firm at $235, aligned with the stock's 200-day moving average. The Federal Reserve's July 31 interest rate decision will also impact growth stock valuations broadly, particularly if policymakers signal a prolonged period of elevated rates.
Retail sales data for June, due July 16, will provide crucial insight into consumer health and spending patterns affecting Amazon's core e-commerce business. Any weakness could exacerbate concerns about retail segment profitability despite cost controls.
Frequently Asked Questions
Why does Jim Cramer think Amazon stock is undervalued?
Cramer believes markets are punishing Amazon disproportionately for short-term cloud growth deceleration while ignoring its dominant market position across multiple industries. He emphasizes the company's advertising growth, retail scale advantages, and potential for AI monetization across AWS services as reasons the current valuation fails to reflect long-term prospects.
How does Amazon's valuation compare to other Magnificent Seven stocks?
Amazon trades at a significant discount to several mega-cap peers on earnings-based metrics. Its forward P/E ratio of approximately 35x compares to NVIDIA at 40x, Microsoft at 34x, and Apple at 30x. This valuation gap exists despite Amazon's superior revenue growth projection of 11% for 2024 versus Apple's estimated 5% growth.
What is the biggest risk to Amazon's investment thesis?
The primary risk involves prolonged deceleration in AWS growth below 10% without corresponding margin expansion, which would undermine the high-margin engine funding other business segments. Secondary risks include regulatory pressures regarding antitrust concerns, particularly around AWS marketplace practices, and potential erosion of retail market share to competitors with improving e-commerce capabilities.
Bottom Line
Markets are pricing Amazon cautiously despite its ecosystem strengths, creating a valuation disconnect that earnings must resolve.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
