Nasdaq's Record High, Amazon CEO Jassy on AI Capex, Palantir vs. "AI Slop." 5/5/26

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Carl Quintanilla (1:00)

Market Moving Insight and Analysis join Jim Cramer, David Faber, and me, Carl Quintanilla, on the opening bell hour of CNBC Squawk on the Street.

Good Tuesday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer at post night of the New York Stock Exchange. Faber's at Milk Inn once again in Beverly Hills. Oil price is behaving pretty well this morning after the highest settle for Brent yesterday in almost four years. The defense secretary argues the ceasefire with Iran is holding and ads were not looking for a fight. Futures are green, S&P is gonna try to get close to some all time highs. A lot of stocks raising guidance today like DuPont and Pinterest, although that long bond's still holding 5% today. Our roadmap begins with Amazon's AI ambitions. Andy Jassy telling Jim last night, investors will be rewarded by the company's heavy AI spend. Speaking of AI, we'll dig through Palantir's numbers after the company posted its fastest increase in sales since 2020 And Shopify's down pre-market on Q1 results. We'll talk to the company's president, Harley Finkelstein, later on this hour.

Let's begin though with Jim's interview with Andy Jassy last night on Mad Money. Let's listen to what the Amazon CEO had to say about CapEx and AI.

Andy Jassy (2:16)

The really big capital expenditure bet that we're making is because we believe that AI is the biggest technology transformation in our lifetimes. It's going to reinvent every single customer experience we know and altogether new ones we never imagined. After the first three years of AWS, we thought we were growing really fast and we were about $56 million in revenue.

After the first three years of this inflection of AI or this incarnation of AI, our run rate is over $15 billion, 260 times what it was the first three years of AWS. We thought we were growing fast with AWS. When you have shifts that are this momentous, you want to make sure that you invest in such a way that you can pursue the opportunity as broadly for your customers as possible. When your revenue growth starts to catch up with the capital expenditure growth, you actually end up really liking the operating margin, the free cash flow and the ROIC. And so we've lived this movie once before in the first wave of AWS, where we had this same type of curve, where we were spending so much capex in the short term. And then we all really liked the free cash flow and the ROIC a few years later. And I think the same story is going to play out except with just much larger revenue and free cash flow downstream.

Carl Quintanilla (3:31)

Jim, I do love that line, we've lived this movie once before.

Jim Cramer (3:35)

But when you're out there, you're conscious that you're dealing with warriors, seasoned warriors, people who have really gone through many, many different travails and know whether it's worth spending money and whether it isn't.

When you come in as skeptical as I was, you're very quickly convinced that perhaps the skepticism has to be tempered initially. And then you go through this period where you say, all right, maybe, and by the end of the day, speaking with a lot of people deep in the bowels of the company who are involved with this, you say, they are so on to something. I wonder if the other hyperscalers recognize how they see this ROI much quicker. This is not a 30-year, this is not a defense, it's an offense that they're playing. And Jassy's talking about 27, 28, making some money.