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Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cramerica. Other people want to make friends. I'm just trying to make you a little bit of money. My job is not just to entertain, but to teach. So call me 1-800-743-CBC or tweet me at @JimCramer. The tech sector has found its savior, and his name is Andy Jassy, the CEO of Amazon. Last week on his conference call, he patiently explained the economics of the data center and how patient shareholders could be rewarded with a huge return.
One that could happen sooner than people think. See, until Jassy spoke, the market seemed highly skeptical of how these mega-cap tech companies were spending their money. Because of him, I don't think that's anymore the case, which is why we could roar today with the Dow gaining 693 points, the S&P jumping 1.4%, and the Nasdaq Composite vaulting 2.13%.
Regular viewers of this show or anyone in the CNBC Investing Club would know that I've been waiting months for Amazon to give us line of sight into something that can justify why they're spending so much money building all these data centers. Amazon's a large position in my charitable trust, so I want to know if there's really a pot of gold at the end of the rainbow. I think I finally got through to them. As Jassy put it, quote, 'At this level of spend and higher, we have clear line of sight to strong financial returns.' End quote. All the money he's putting toward the data center may not be even enough to capitalize on the opportunity, even if the astronomical amount of $220 billion in capital expenditures, up from $200 billion previously. Jassy says, quote, 'We will not have enough capacity to meet all the demand we have in 2026.' And I believe this dynamic will also be true in 2027, too. In fact, the demand we already have for 2028 is striking.
Holy cow, that word 'striking' changed a lot of people's minds, as did his statement that Amazon Web Services could be a trillion-dollar business now that it's augmented by AI. Trillion dollars. I know that many investors have been befuddled by Amazon's seemingly reckless decision to spend itself into having negative cash flow. But you have to remember that this is not the first time Jassy's had to spend more than Amazon took in initially in order to hit it big. Before replacing founder Jeff Bezos as CEO in 2021, Jassy led the creation of Amazon Web Services, their cloud infrastructure division that's so lucrative, the cloud unit has now become Amazon's most profitable business, far surpassing Amazon Prime. Jassy thinks that the battle for returns from AI will come faster than the returns from the web services business did. Amazing. We sometimes forget how many years Amazon spent losing money in order to achieve its dominant position. Jassy knows from experience that Amazon has to go out on a limb periodically to keep the ground. This is the limb that must be revisited.
I found it refreshing to hear a breakdown of where the AI spending goes, with Jassy explaining again patiently that there are two major investments in a data center. The first is the construction of the data center building, and the second is the compute, which consists of servers and networking gear that go under the roof. Here's how he put it. Quote: 'Once a data center opens with servers plugged in, we start generating significant revenue right away and then get to monetize these data centers for 30-plus years without having to spend that startup capital again.' End quote. Apparently, it takes a little less than three years to break even on the investment in servers and networking gear, and then it's pure profit for another two to three years. Then they get to do the same cycle another four or five times. No wonder the hyperscalers are spending like crazy. That is a terrific investment. They'd be nuts not to do it. That's how I felt after this call. It was Jassy's calm, thoughtful presentation that allowed him to raise his capex budget from $200 billion to $220 billion and still have Amazon stock soar to its biggest one-day gain in over a decade. Even though he raised the capex $20 billion, the stock jumped another 12 points and change again today, and now has joined the rarified $3 trillion club along with Nvidia, Alphabet, Apple, and Microsoft.
Now, I want you to contrast Amazon's commentary with Google parent Alphabet. Back on July 22nd, Alphabet raised its capex guidance by a similar amount, or up to $15 billion, to a range of $195 to $205 billion. In response, the stock had its third worst day in the past two years. Despite liking the company very much, I made clear to club members that I was disappointed in Alphabet's conference call. They simply didn't explain why they'd be willing to jeopardize their once pristine balance sheet on AI. Now, do not get me wrong. I was indeed blown away by the 82% growth in Google's cloud business and said as much last week to you after I interviewed Thomas Kurian, who runs that business. But they didn't hold your hand on the call like Amazon. Now, maybe they didn't think it was their job. Maybe it isn't their job, but boy, I sure needed it. A descent into negative free cash flow is something that needs to be explained in depth, people. But Alphabet was almost glib about it. I believe the same numbers explained differently would have sent that stock higher, not lower.
In the end, though, Amazon came to the rescue. Andy Jassy's calm commentary was a rising tide, and it lifted all boats, including Alphabet, with a stock that's now trading above where it was when the company did its big fundraise not that long ago at $355 a share. It closed up $17 today. At the same time, Microsoft deserves a lot of credit for reporting a blowout quarter last Wednesday night. Not only was Microsoft free cash flow positive despite its massive spending, they're doing much better on the front end, integrating their Copilot AI assistant into the mix. I did not know this. Plus, Microsoft's Azure cloud business, like Google Cloud and Amazon Web Services, is totally on fire. The stock has continued to ascend pretty much in a straight line. Glad we held on for the charitable trust even when Wall Street was highly skeptical. That stock closed up almost $23.
Ah, the toughest one to follow. My former favorite. This is hard to swallow, this one. Get this. Meta. Meta, the master spend explanation here was the weakest. In fact, it was non-existent. Meta is participating in the huge data center buildout, but it has no cloud service business to help monetize that investment. There has been chatter that the company might offer a web service business, but it seems like CEO Mark Zuckerberg wasn't sure whether Meta should use the massive compute it's building for itself or rent it out to others. Now, I was shocked. I was disappointed. I was disappointed that Meta didn't seem to have a plan. I came into the conference call expecting great things, including some projections of how quickly they could recoup their costs. I got none. The stock's beatdown told me that I was not alone. I guess you can't make up the tens of billions lost just by selling souped-up Ray-Bans. Still, Meta also benefited from the Amazon halo, and the stock rallied more than $33, or 6%, today. Not all is forgiven, though. It's still $50 below, a little bit more, where it was just a couple weeks ago. But you never know. Maybe Meta will hear the thunder. Maybe they reveal a strategy of its own in the not-too-distant future.
One more beneficiary, even as Amazon makes its own chips for the data center. It did mention its partnership with Nvidia, which shattered that there's very strong demand for Nvidia chips. I didn't know that was revealed. It led the stock of the biggest company in the world to an almost $6 gain, or 2.93%. And that puts it back above the $5 trillion market cap level. Apple itself. Well, these hyperscalers have bid up the price of some of the most common chips to heights that Apple said will hurt sales going forward, but that's a bigger discussion than I can go over here. And it's one that I think actually could keep a lid on Apple stock for some time unless a new source of chips gets revealed that I can't think of. The bottom line: thanks to Amazon, and yes, to a lesser extent, Microsoft, the AI data center trade is back on because we finally know how these investments will actually help the hyperscalers make money. For me, it's in Jassy we trust, and we should thank him for explaining why spending hundreds of billions of dollars may be a pittance versus what shareholders can make holding on to his stock and perhaps the others, too. Let's go to Robert in New York. Robert.
I have a guy who writes with me, Matt Horween, and we were discussing this this weekend. He's been my colleague for 25 years, and we both think that perhaps Oracle is bottom. Now, I don't want to go out on a limb and say it definitely is bottom because if something happens and people replay the tape over and over again, the stock's better. I think it does matter. I think that you should hold on to it. I don't believe that their investment grade right now. Their credit's still very good. And I know this, like many other stocks, have been beaten down and perhaps overly beaten down. I think the stock can head higher. All right, today Amazon and Microsoft turned the AI data center trade back on. Let's see if it can keep running. And this is all just a carryover from last week. Well, Mad Money tonight. Next, Nex Power has transformed its solar business as it grows its data center pipeline. But has that hurt or helped the stock lately? I'm checking in on the sunny side of things with the CEO, who's going to be on the show for the first time in a little bit. Then July was a rough month for stocks. So what can we learn from the market action? I'm taking a look at the winners and the losers. And I'm sitting down with the CEO of one of the most surprising turnaround stories of our era. And that's Pney Bose. Stay with Cramer.
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Let's talk about Nex Power, the world's leading solar tracker company. Now, you might remember them as Nextracker from their previous appearances. Their hardware and software let solar panels follow the sun, making them much more efficient. Lately, they've moved into electrical systems, inverters, battery storage, and all sorts of solutions to help customers generate and deliver consistent electricity. This stock's been a terrific long-term performer, but it's down almost 24% since the end of June because a lot of these new businesses are connected to the data center, which until Amazon's conference call had fallen out of favor. Last week, Nex Power reported a mixed-positive quarter with in-line revenue, a 15-cent earnings beat off a $1.05 basis. Management raised the low end of their full-year forecast but left the high end unchanged. They do have a ton of new business, though. Earlier today, we checked in with Dan Sugar. He's the founder and CEO of Nex Power to get a better read on the situation. Take a look.
Dan, it's been way too long. Many things have changed, including the name of the company. If you can just give us some of the narrative of what's changed, I think people will understand why I'm so excited to have you back on.
