Just caught Jim Cramer's latest take on AI stocks and honestly, the guy's been making solid calls on this trend. He's zeroing in on Alphabet and Amazon as the real plays in this space, and here's the thing — Wall Street analysts seem to agree they're undervalued right now.

Let's break down what's happening. Alphabet's cloud division just posted three straight quarters of accelerating revenue growth, which is pretty significant. But what really caught my attention is how they're monetizing their custom AI chips now. Meta and Anthropic are already paying multibillion-dollar deals to rent their TPU capacity, and more partnerships are coming. That's a whole new revenue stream we're just starting to see scale.

On the Amazon side, they're using AI to squeeze efficiency out of their retail operations in ways most people aren't talking about. Their cloud business hit a 13-quarter high in growth recently at 24%, and that's before you factor in their custom Trainium and Inferentia chips. OpenAI just locked in a $138 billion deal to use their Trainium capacity — that's the kind of validation that matters.

Here's where valuations get interesting. Alphabet's trading at 28x earnings with a $385 median analyst target, implying roughly 29% upside from current levels. Amazon's at 30x with a $285 target, suggesting 31% upside. Yeah, those multiples look steep on the surface, but both companies have beaten consensus estimates by 15-19% consistently over the last six quarters. When you factor that in, the current prices start looking like actual entry points for AI stocks with real competitive moats.

Wall Street's projecting 11% annual earnings growth for Alphabet and 15% for Amazon through 2027. The capital intensity argument around Amazon's $200 billion capex spend is overblown — they're literally monetizing that infrastructure as fast as it goes live. These two trillion-dollar companies aren't just riding the AI wave; they're building the infrastructure that powers it. If you're looking at serious AI stocks with proven business models, these deserve attention.