Amazon’s latest job cuts may help its bottom line, but CNBC’s Jim Cramer advised investors to focus on what really matters. That would be Amazon Web Services. The e-commerce and cloud giant said Tuesday it would cut 14,000 corporate jobs, or about 4% of its total corporate and tech workforce, to invest in other priority areas such as generative AI. The company employs approximately 1.5 million people worldwide. Most of those positions are warehouse jobs. “The cuts we’re sharing today are a continuation of our efforts to further reduce bureaucracy, remove layers, and shift resources to ensure we invest in our biggest bets.” Beth Galetti, Amazon’s senior vice president of people experience and technology, said in a blog post. “Layoffs are a good thing, but they don’t matter at all (for the next quarter),” Jim said Monday on “Mad Money,” previewing Amazon’s third-quarter results, which are scheduled to be released after Thursday’s close. “The stock is being valued on whether Amazon Web Services will grow as well as Azure. That’s ridiculous. It’s much bigger than Azure,” Jim reiterated on Tuesday’s “Squawk on the Street” show. AWS, the largest cloud, grew 18% in the second quarter, lagging second place Microsoft’s Azure, which grew 39%. (Alphabet’s Google Cloud is third, with Oracle a distant fourth but growing). Jim expects Amazon’s cloud division to deliver 21% revenue growth in the third quarter, which could be enough to boost the stock and finally break out after months of lagging behind its tech rivals. For years, markets have generally welcomed layoff announcements as a boost to earnings, but Amazon’s announcement didn’t move much, with the stock rising just over 1.5%. Amazon is expected to rise less than 4% in 2025, making it the worst year-to-date among the Magnificent Seven stocks. The S&P 500 is up nearly 17% this year. Zooming out, Amazon’s stock performance looks even worse. The stock has increased nearly 30% since Andy Jassy took over as CEO in July 2021. Over the same period, the S&P 500 index rose nearly twice that amount, and Microsoft soared 95%. AMZN 5Y Mountain 5-year performance of AMZN stock. But Jim said the company’s poor performance under Mr. Jassy is not a reason to sell stock, nor does it undermine the CEO’s leadership. Mr. Jassy, who took over from Amazon founder Jeff Bezos, has been working to cut costs across the company in recent years. Amazon laid off 27,000 employees between 2022 and 2023, and has continued to cut jobs ever since to build a leaner, more efficient business. At the same time, the company, like all hyperscalers, is also ramping up its investments in AI. “I’m with Jassy,” Jim said, adding that he’ll stick with Amazon even if it lags behind the big stocks. He said he has no intention of making the same mistake of selling Alphabet. The club completed its exit from Alphabet in March after a period of poor performance due to government antitrust headwinds and the threat of AI to Google search. “I’m furious that I sold,” Jim said, reflecting on Alphabet’s subsequent meteoric rise. “This is what I did to Alphabet. I’m not going to screw this up,” he said, referring to Amazon. (See here for a complete list of Jim Cramer’s Charitable Trust stocks.) As a subscriber to Jim Cramer’s CNBC Investing Club, you’ll receive trade alerts from Jim Cramer before he makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
