Overview
- Jim Cramer aired a bullish thesis on Sept. 3 saying Amazon and Alphabet are undervalued because their AI-driven cloud businesses are entering a high-profit phase.
- Amazon’s Q2 results show AWS revenue of $42.2 billion, up 37%, and AWS operating income of $16.6 billion, which Cramer cited as evidence of accelerating cloud profits.
- Alphabet reported Google Cloud revenue of $24.8 billion, up 82%, and companywide operating income growth of about 30%, reinforcing the growth case for its AI infrastructure.
- Both companies reported heavy capital spending that has strained cash flow: Amazon showed a trailing‑12‑month operating cash flow of $161.4 billion versus $169 billion in net PPE purchases and negative free cash flow of roughly $7.6 billion, and Alphabet’s quarterly capex of about $44.9 billion exceeded operating cash flow with roughly $98 billion recorded as other income from unrealized investment gains.
- The key question for investors is whether cash generated from AI and cloud demand will justify current outlays and make reported earnings multiples durable, a choice that could affect future returns and companies’ spending plans.