We recently published an article titled, Jim Cramer on Netflix and Other Stocks. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other stocks discussed by Jim Cramer.

Recently, Mad Money’s host, Jim Cramer addressed what he called a “ridiculous plethora of sell-side downgrades,” noting that the Dow Jones Industrial Average fell by 0.94%, the S&P 500 decreased by 0.96%, and the Nasdaq Composite dropped by 1.18% on Monday. While he acknowledged the session’s poor performance, he cautioned that paying too much attention to downgrades can be detrimental for long-term investors.

Cramer urged investors not to get overly influenced by the negative sentiment on Wall Street and emphasized the importance of staying committed to strong companies, even when their stock prices experience volatility. He recounted the history of the bull market, stating:

“When I look at the history of this incredible bull market, and it has been an incredible bull market, it’s littered with buy-to-hold, hold-to-sell, buy-to-hold, hold-to-sell. These downgrades scare you out of amazing stocks at levels that may temporarily be too high, but will recover later. If you listen to the downgrades, though, you’ll never recover with it.”

In discussing the challenges investors face, Cramer pointed out that many get rattled by analyst downgrades and might sell their shares in solid companies, which can make it difficult to buy back in later.

“In the last decade, the toughest thing to do is to hold on to good stocks. But analysts and commentators love to take aim at big long-term winners. Their jeremiads have scared so many people out of some amazing gains.”

He observed that complacency can be prevalent on Wall Street, with bullish investors often overlooking risks while bearish ones miss out on potential opportunities. For those considering action based on a downgrade, Cramer advised waiting for a bounce to sell, but he noted that timing such moves is “incredibly hard,” even for seasoned traders.

Cramer emphasized that when analysts downgrade stocks that have already taken a hit and overlook positive aspects, it can create a challenging environment. However, he believes it is still possible to profit. Here’s what he said:

“I need you to understand that when analysts downgrade after stocks have already been hammered, when really good investors ignore the positives, then, it may be a grim time. But not so grim that we can’t make money by focusing on the fundamentals of the companies. And not just the economy, the Fed, interest rates and oil.”

Our Methodology

For this article, we compiled a list of 15 stocks that were mentioned by Jim Cramer during his episodes of Mad Money on October 7 and October 8. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 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: 308

Amazon.com, Inc. (NASDAQ:AMZN) is a global powerhouse in the retail industry, offering a wide array of consumer products through both online and physical platforms. Recently, Jim Cramer discussed Wells Fargo’s downgrade of Amazon. He noted the stock’s drop from $184 to $161 but its recent rise to $186. He said:

“First downgrade, Amazon by Wells Fargo titled “Positive Revision Story on Pause Reducing to Equal Weight”. Totally get it, lots of headwinds, stock’s abused from the so-called bad quarter when Amazon fell from $184 to $161. Since then, it’s traded as high as $195, but it’s $186 as of last week. It’s time to sell? I’m not so sure.

What do these analysts fear? Amazon spending a lot on a ton of initiatives, worries about Walmart impact. So there’s a slight estimate cut, too. Wait a second. I say. How many times, how many times has Amazon been up against headwinds? Do you know how many times the company’s made some inexplicable moves? This is nothing new. Yet Amazon has always come back. It’s in their culture. It’s in their DNA. It always does.”

Cramer emphasized that the company has historically faced challenges and always rebounded. He suggested that while the stock may dip, he believes it will recover again. He added:

“I remember a year and a half ago when I was screaming at them because Amazon Web Services was underperforming. Came right back. Last time they reported, I was in disbelief at the Olympics and the attempted assassination of Donald Trump led to a light third-quarter sales guide. I was apoplectic at the Alexa losses and what happens? Comes right back.

So I say knock yourself out and sell it if you have to. Let me ask you, did you sell Amazon at $161 after that last supposedly bad quarter? How did it feel when the stock didn’t bounce to $195? Once again, I think it’s just a matter of time before Amazon bounces back. As usual. No hurry. Stock does seem to be headed lower, I’ve no doubt about that. I get it. But sell to buy it lower? Can you really get back in that? Too hard.”

While Amazon (NASDAQ:AMZN) generates a significant portion of its revenue from its retail operations, it finds a substantial share of its profits through Amazon Web Services (AWS), which stands as one of the largest cloud infrastructure providers worldwide. This segment operates with considerably higher margins compared to retail.

The ability to provide discounts, free shipping, and affordable hardware options for Prime members has been pivotal in Amazon’s (NASDAQ:AMZN) growth strategy. With over 200 million Prime subscribers globally, the company has cultivated a loyal customer base. As of the second quarter of 2024, AWS commanded a significant 33% share of the cloud infrastructure market.

It reported mixed outcomes in its second-quarter earnings report. The company saw revenue rise by 10% to reach $148 billion, which fell slightly short of analysts’ expectations. However, it reported a notable increase in GAAP net income, which surged 94% to $1.26 per share, exceeding forecasts.

Overall, AMZN ranks 1st on our list of stocks discussed by 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: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

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