Alphabet Inc (NASDAQ:GOOGL)’s shares are up by 80% over the past year and by 12.3% year-to-date. Cramer has turned increasingly positive on the firm over the past couple of months. Most of his praise has focused on Alphabet Inc (NASDAQ:GOOGL)’s cloud computing business and its AI platform. The shares dipped after the firm reported its second-quarter earnings. The development didn’t sit well with Cramer as he was “shocked” by the dip. The CNBC TV host also discussed Alphabet Inc (NASDAQ:GOOGL) in a series of tweets after Amazon reported its second quarter earnings. He outlined that the shares should be higher after the report and the firm had to follow a similar strategy to regain lost investor sentiment:
“Watch Alphabet, it is about to take out the $355 level where the secondary took place. A critical level as i will talk about in my Sunday Club Thinkpiece
“Yes Google should be up more off of Amazon, which told you about the line of sight. Google has to rethink how it does its call as it truly was suboptimal
“Best in show: Amazon for explanation of what the heck it is doing to get line of sight..and it has it. Now Google has to do the same thing…
“As you know from my piece this weekend, the one to buy on any downturn is Amazon…”
So what were the results that had the CNBC TV host excited? Well, Amazon.com, Inc. (NASDAQ:AMZN) reported its second-quarter earnings on July 30th. The results saw the firm post $200.6 billion in revenue and $1.97 in earnings-per-share to beat analyst estimates of $196.47 billion and $1.82. Additionally, Amazon.com, Inc. (NASDAQ:AMZN)’s cloud computing business, Amazon Web Services’ $42.2 billion in revenue also beat estimates of $40.53 billion.
The debate surrounding Alphabet Inc (NASDAQ:GOOGL) is quite straightforward given its businesses. The central issue relates to its artificial intelligence initiatives and lingering government antitrust actions. Starting from the former, Alphabet Inc (NASDAQ:GOOGL)’s aggressive spending continues to raise questions from the bear camp due to their impact on margins and bottom-line profitability. They argue that the hits to profitability might not be justified by the return that Alphabet Inc (NASDAQ:GOOGL) makes through AI. However, the bulls argue that the firm’s cloud business continues to perform well and it is also monetizing the Gemini models. Additionally, Alphabet Inc (NASDAQ:GOOGL)’s custom AI chips called TPUs are another source of optimism. On the antitrust front, a lawsuit by advertiser Teads Holding, the Justice Department’s latest filing with the D.C. Court of Appeals and pressure by advocacy against payments to Apple are some points from the bear camp.
As for Amazon.com, Inc. (NASDAQ:AMZN), the issue remains the same, with capital expenditure also driving the debate. As with Google, the bulls and the bears are also divided by the future returns of the current capital outlays. Therefore, naturally, the revenue growth for Amazon.com, Inc. (NASDAQ:AMZN)’s cloud business is key to the bull’s argument of optimism. In the second quarter, the cloud business grew revenue by 37% annually and beat estimates for 31% growth. Additionally, the firm also posted a $496 billion AWS backlog. However, the bears point towards the massive $220 billion in capital expenditure that Amazon.com, Inc. (NASDAQ:AMZN) aims to incur in 2026 to fuel its growth. They outline that the firm’s trailing-twelve-month free cash flow was an outflow of $7.6 billion due to the spending.
Looking at hedge fund sentiment, Insider Monkey’s data shows that Amazon.com, Inc. (NASDAQ:AMZN) was the top stock held by hedge funds in Q1 2026, as 353 out of 1,022 funds held a stake. Alphabet Inc (NASDAQ:GOOGL) ranked in fourth place with 265 hedge fund stakeholders. Short interest as a percentage of float was between 1% to 1.35% for both firms as of mid-July. Fisher Asset Management was the largest stakeholder in both firms. Additionally, the two are also part of our list of 10 Blue Chip Stocks Jim Cramer is Crazy About.
While Insider Monkey acknowledges the risk and potential of GOOGL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than GOOGL that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: Jim Cramer Draws the Line on NVIDIA in China: Why National Security Comes First and Jim Cramer Defends His Dell Stance as Investors Complain About Missing Out.
Disclosure: None.
