Mad Money w/ Jim Cramer 8/3/26

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**Jim Cramer** (1:18)
Hey, I'm Cramer.

**Jim Cramer** (1:19)
Welcome to Mad Money. Welcome to Cray America. Other people want to make friends. I'm just trying to make you a little bit of money. My job is not just to entertain, but to teach. So call me at 1-800-743-CBC or tweet me at Jim Cramer. The tech sector has found its savior, and his name is Andy Jassy, the CEO of Amazon. Last week on his cop score, he patiently explained the economics of the data center and how patient shareholders could be rewarded with a huge return.
One that could happen sooner than people think. See, until Jassy spoke, the market seemed highly skeptical of how these mega cap tech companies were spending their money. Because of him, I don't think that's anymore. It's no longer the case, which is why we could roar today with the Dow gaining 693 points as we jumping 1.4 percent in the NASDAQ poll voting 2.13 percent.
Regular viewers of this show or anyone in the CBC Investing Club would know that I've been waiting months for Amazon to give us line of sight into something that can justify why they're spending so much money building all these data centers. Amazon's a large position in my chapel trust, so I want to know if there's really a pot of gold at the end of the rainbow.
I think I finally got through to them. As Jassy put it, quote, at this level of spend and hire, we have clear line of sight to strong financial returns, end quote. All the money he's putting toward the data center may not be even enough to capitalize on the opportunity. Even at the astronomical amount of $220 billion in capital expenditures, up from 200 billion previously, Jassy says, quote, we will not have enough capacity to meet all the demand we have in 2026 and I believe this dynamic will also be true in 2027 too. In fact, the demand we already have for 2028 is striking.

**Jim Cramer** (3:19)
How's a pleasure.

**Jim Cramer** (3:21)
Holy cow. That word striking changed a lot of people's minds. As to this statement that Amazon Web Services could be a trillion dollar business now that it's augmented by AI.

**Jim Cramer** (3:31)
Trillion dollars.

**Jim Cramer** (3:32)
I know that many investors have been befuddled by Amazon's seemingly reckless decision to spend itself into having negative cash flow. But you have to remember that this is not the first time Jassy's had to spend more than Amazon took in initially in order to hit it big. Before replacing founder Jeff Bezos as CEO in 2021, Jassy led the creation of Amazon Web Services, their cloud infrastructure division that's so lucrative. The cloud unit has now become Amazon's most profitable business, far surpassing Amazon Prime. Jassy thinks that the bountiful returns from AI will come faster than the returns from the Web Services business did. Amazing! We sometimes forget how many years Amazon spent losing money in order to achieve its dominant position. Jassy knows from experience that Amazon has to go out on a limb periodically to keep the ground. This is the limb that must be revisited.
I found it refreshing to hear a breakdown of where the AI spending goes, with Jassy explaining, again, patiently, that there are two major investments in a data center. The first is the construction of the data center building, and the second is the compute, which consists of servers and never can hear go under the roof. Here's how we put it, quote, once a data center opens with servers plugged in, we start generating significant revenue right away, and then get to monetize these data centers for 30 plus years without having to spend that startup capital again, end quote. Apparently, it takes a little less than three years to break even on the investment in servers and network gear, and then it's pure profit for another two to three years. Then they get to do the same cycle another four or five times. No wonder the hyperscalers are spending like crazy. That is a terrific investment. It would be nuts not to do it. That's how I felt after this call. It was Jassy's calm, thoughtful presentation that allowed him to raise his CapEx budget 200 billion to 220 billion, and still have Amazon's stock soar to its biggest one day gain in over a decade, even though he raised the CapEx 20 billion. The stock jumped another 12 points and changed again today, and now has joined the rarefied $3 trillion club along with Nvidia, Alphabet, Apple, and Microsoft.