Jim Cramer Says Buy 2 AI Stocks Up 190% and 230% Since Early 2023

Since January 2023, Amazon (NASDAQ: AMZN) shares have increased 190%, while Uber Technologies (NYSE: UBER) shares have increased 230%. But CNBC's Jim Cramer, a former hedge fund manager who earned returns of 24% annually over 14 years, recently said both stocks are still worth buying.

Here are the important details.

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1. Amazon

Amazon has a strong presence in three big industries. It operates the largest e-commerce marketplace in North America, Western Europe, and the Middle East. It is the third largest ad tech company in the world. And Amazon Web Services (AWS) is the largest cloud services provider as measured by infrastructure and platform services spending.

Leadership in cloud computing is particularly important because it means AWS is ideally positioned to benefit as demand for artificial intelligence (AI) infrastructure increases. CEO Andy Jassy recently told analysts, "AWS is where the preponderance of companies' data and workloads reside, and part of why most companies want to run AI on AWS."

AWS has doubled down on the opportunity by developing custom AI accelerators for training and inference, which provide customers with an alternative to Nvidia GPUs. The company has also positioned itself as the primary cloud provider for Anthropic, an AI startup valued at $350 billion. Finally, AWS has introduced new cloud services such as Bedrock for generative AI application development.

Elsewhere, Amazon is using AI to make its retail business more efficient. It has designed more than 1,000 generative AI applications to improve inventory placement, demand forecasting, last-mile delivery, and customer service. It has also developed an AI model that lets robots navigate warehouses faster, and it's designing another model that will let human workers engage robots in natural language.

Wall Street expects Amazon's earnings to increase at 18% annually over the next three years. That makes the current valuation of 35 times earnings look relatively reasonable, especially because the company beat the consensus earnings estimate by an average of 25% over the past eight quarters. I agree with Jim Cramer. Patient investors should feel comfortable buying a position in Amazon today.

2. Uber Technologies

Uber operates not only the largest ride-sharing platform in the world, but also one of the largest food delivery platforms. Integrating those services into a common mobile app lets Uber efficiently acquire new customers by cross-promoting its mobility services to delivery users and its delivery services to mobility users.

While not a traditional AI stock, Uber uses machine learning to efficiently match and route drivers, provide customer support, and personalize advertising. In addition, leadership in ride-sharing makes Uber the perfect partner for autonomous vehicle (AV) companies that want to scale a robotaxi businesses.

Uber already works with 20 AV companies. CEO Dara Khosrowshahi says, "Uber can deliver the lowest operational costs for our AV partners because we are leaps and bounds ahead on every aspect of the go-to-market capabilities that are critical for commercialization." Some of the most consequential partnerships are:

• Alphabet's Waymo offers robotaxi rides through Uber in Phoenix; Austin, Texas;, and Atlanta.
• Avride offers robotaxi rides through Uber in Dallas.
• WeRide offers robotaxi rides through Uber in the United Arab Emirates (Abu Dhabi, Dubai) and Saudi Arabia (Riyadh). The companies plan to add about 15 more cities in the next five years.
• Nvidia provides hardware, sensors, and software through its Hyperion platform that Uber partners, including Stellantis, use to build AVs. Uber aims to deploy 100,000 robotaxis within a few years.

Straits Research estimates that the ride-sharing market will grow at 21% annually through 2033, and Grand View Research estimates the robotaxi market will grow at 99% annually over the same period. Uber should be a major beneficiary in both cases. Morgan Stanley analysts think the company will account for 22% of U.S. robotaxi trips by 2032, which would put it in third place behind Waymo and Tesla.

Wall Street expects Uber's earnings to increase at 26% annually over the next three years. That makes the current valuation of 10 times earnings look cheap, especially when Uber beat the consensus earnings estimate in six of the past eight quarters. Investors with a time horizon of at least three years should buy a position today.

Trevor Jennewine has positions in Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Nvidia, Tesla, and Uber Technologies. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.