We recently published a list of 17 Best Stocks for Kids According to Jim Cramer. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other best stocks for kids according to Jim Cramer.

Jim Cramer, host of Mad Money, made a compelling argument on Monday that parents should begin investing for their children as soon as they are born. He emphasized that whether parents choose index funds, individual stocks, or a combination of both, it is important to start early.

Cramer pointed out that there are many factors to consider when making investment decisions, especially age suitability. He advised parents to set up accounts for their kids or, at the very least, provide them with shares of stock as soon as possible. The goal is to begin the saving process from day one. He added:

“I’m talking about index funds, which aren’t perfect, but they’re the best way to go if you want to put your money on autopilot and you can’t spend a lot of time looking at individual stocks… I’m partial to cheap ETFs that mirror the S&P 500 because those 500 stocks represent the bedrock of America’s publicly traded companies.”

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He explained that, when investing for an infant, there is plenty of time for the money to grow, with compounding offering significant long-term benefits. As Cramer put it:

“You’re buying for an infant who’s got their whole life ahead of them, their whole life. These kinds of things can really compound over time, meaning if you let it run, then money can build up on itself.”

When discussing what stocks to pick for a newborn, Cramer suggested two types of investments: those with dividends, which can be reinvested to take advantage of the compounding effect, and growth stocks which have the potential for higher returns over time. He recommended selecting well-known names that offer both dividends and growth potential, as they can provide a balance of stability and upside.

For parents looking to open an investment account for their children, Cramer recommended setting up a Uniform Gift to Minors Act (UGMA) account. As children grow older, Cramer stressed the importance of involving them in the investing process.

“I think you should do everything in your power to get your kids involved in investing in stocks, teaching that stocks represent pieces of companies that they might like.”

However, he acknowledged that teenagers can be tough to engage when it comes to topics like stocks. “Teenagers are incorrigible,” Cramer quipped, “The last thing they want to hear about is stocks.” As a result, he advocated for letting teenagers take the lead and choose stocks they are passionate about, rather than dictating what they should buy.

Cramer also observed that teenagers tend to avoid phone calls but are drawn to apps. In fact, he noted that delivery apps, which he initially did not understand, have completely transformed the way we shop and interact with technology. Cramer reflected on how products designed for tech-savvy users were not targeting older generations like him, but now, those same apps dominate the market.

“Bottom line: Please buy your kids a few shares in a name brand that they know and you know. Something they can see and hear and touch then put it away.”

Our Methodology

For this article, we compiled a list of 17 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on February 10. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 286

Cramer discussed that teenagers’ likes and dislikes can be used to guide their investment choices. Talking about his kids discovering and liking tech before he did, Cramer mentioned Amazon.com, Inc. (NASDAQ:AMZN) and said, “No, FAANG wasn’t purely their creation. I figured out Amazon.”

Amazon (NASDAQ:AMZN) provides a wide range of services, including e-commerce, advertising, and subscription-based offerings. Around a week ago, Cramer discussed the company’s recently released earnings report and said:

“Next up, Amazon. Now, they reported a really great number tonight with better than expected sales, up 10% year over year, monster 37 cent beat off a $1.49 basis. Top line beat was driven by the core e-commerce business with the company calling this past holiday season the most successful yet for Amazon. But all three of the company’s segments beat operating income expectations for the quarter.”

Overall, AMZN ranks 17th on our list of best stocks for kids according to Jim Cramer. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.