Jim Cramer highlighted that not all technology firms will be adversely affected by a slowdown in data center construction, suggesting that this scenario could actually favor established players like Amazon. Following the recent midterm elections, Amazon's shares have risen 7%, reflecting investor optimism.
Cramer noted that a slowdown could benefit incumbents like Amazon and Microsoft, which already possess extensive data center networks, allowing them to capture more demand for AI computing power as new capacity becomes harder to establish.
He compared the situation to a yellow flag in Formula One racing, where all competitors must slow down, thereby giving an advantage to those already in the race. Cramer believes that this environment could lead to improved free cash flow for these hyperscalers, making them more resilient compared to smaller neocloud providers that rely heavily on continuous expansion.
He expressed confidence in Amazon's potential to reach $300 per share, indicating nearly 10% upside from current levels. This perspective comes after a challenging few months for Amazon, where its stock had dropped over 15% by the end of October, but the recent rally suggests a turnaround for the company