Amazon Stock Catches Fire

Updated from 7:37 a.m. EDT

Investors are thrilled with their latest Amazon.com(AMZN Quote) delivery.

The Web retail giant blew past analysts' second-quarter expectations and promised good times ahead for the rest of the year. The online retailer scored a pair of analyst upgrades, from Bear Stearns and Lehman Brothers.

Shares of Amazon jumped nearly 27% in early trading Wednesday to $87.77 -- a price not seen since the stock's glory days in early 2000.

In addition to the company's impressive 35% year-over-year sales growth in the second quarter, investors cheered Amazon's unexpectedly strong operating margins and slowing growth on technology and content spending.

For the quarter, net income jumped 257% to $78 million in the second quarter, or 19 cents a share, from $22 million, or 4 cents a share, a year earlier.

Net sales increased 35% to $2.89 billion in the second quarter, compared with $2.14 billion in the second quarter of 2006.

For the quarter, analysts surveyed by Thomson Financial/First Call had forecast earnings per share of 16 cents on revenue of $2.81 billion.

The company's closely watched operating margin, based on worldwide sales, came in at 4%, compared to 2.2% for the same period last year.

Spending on technology and content fell to 7% of sales from 7.8% for the same period last year.

In a conference call for investors, Amazon CFO Tom Szkutak says the company expects to see more modest growth in technology and content spending for the rest of the year.