Despite a recent sell-off triggered by substantial capital expenditure plans, Jim Cramer, host of CNBC’s “Mad Money,” reaffirmed his support for Amazon.com Inc. (NASDAQ: AMZN) on Friday, even as he acknowledged a broader shift in investor sentiment towards the technology sector’s once-dominant “Magnificent Seven.”
Amazon shares slid more than 7% on Friday, marking its worst single-day performance since August 2025, despite reporting fourth-quarter earnings that exceeded Wall Street expectations. The decline followed CEO Andy Jassy’s announcement of a planned $200 billion investment in capital expenditures for 2026, a figure that unsettled investors concerned about near-term profitability.
Cramer, speaking before the market open, took to X (formerly Twitter) to state, “I will defend Amazon today. But it did trade to 197 yesterday as people recognize, like we did, that the Mag 7 is no more. But it is Google that is the prize.” This statement signals a potential re-evaluation of the investment landscape within the high-performing group of technology stocks that have driven market gains in recent years.
The Shifting Landscape of the “Magnificent Seven”
The “Magnificent Seven” – comprising NVIDIA Corp (NASDAQ: NVDA), Microsoft Corp (NASDAQ: MSFT), Meta Platforms Inc (NASDAQ: META), Amazon, Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG), Apple Inc (NASDAQ: AAPL), and Tesla Inc (NASDAQ: TSLA) – has been a focal point for investors seeking growth and stability. However, recent performance has been mixed, with Amazon’s struggles and shifting capital allocation strategies raising questions about the group’s continued dominance.
Cramer’s highlighting of Alphabet as “the prize” suggests a growing belief that the company is better positioned to capitalize on the burgeoning demand for artificial intelligence and cloud computing infrastructure. Alphabet’s recent capital spending forecast of $175 billion to $185 billion for 2026, exceeding Amazon’s planned investment, underscores this view.
Amazon’s Investment and Market Reaction
Amazon’s fourth-quarter net sales reached $213.39 billion, surpassing analyst estimates of $211.30 billion. However, the announcement of the $200 billion capital expenditure plan overshadowed the positive earnings report. Investors are concerned that the substantial investment, while aimed at addressing supply constraints and expanding capacity, could weigh on near-term profitability and shareholder returns.
The planned spending is largely directed towards bolstering Amazon Web Services (AWS), the company’s cloud computing division, and supporting its growing artificial intelligence initiatives. AWS revenue grew 24% year-over-year in the fourth quarter, marking its fastest pace of growth in over three years. This growth is fueled by increasing demand for cloud services and AI infrastructure, but requires significant investment to maintain and expand capacity.
Cramer acknowledged the near-term pressure on Amazon’s stock, stating, “I am not going to say Amazon’s overdone on the downside because i figure tomorrow’s pretty ugly. I am saying that there’s a reason for the spend that can be justified.” This suggests Cramer believes the long-term benefits of the investment will outweigh the short-term pain.
Broader Market Trends
Despite Amazon’s decline, major indices posted gains on Friday. The S&P 500 rose 0.96% to 6,863.56, while the Nasdaq-100 gained 0.88% to 24,764.51. This suggests that the market is not uniformly reacting negatively to the shift in the technology landscape, and that value stocks are gaining favor over growth stocks.
The recent software-driven sell-off paused on Friday, with stocks like Robinhood Markets Inc. (NASDAQ: HOOD) and Coinbase Global Inc. (NASDAQ: COIN) experiencing significant rebounds. This indicates a potential stabilization in the technology sector, but also highlights the increased volatility and sensitivity to earnings reports and capital expenditure plans.
As the market adjusts to a new era of higher interest rates and evolving investment priorities, the composition and performance of the “Magnificent Seven” are likely to undergo further scrutiny and re-evaluation.
