Amazon Rise Defies the Odds

The bullish explanation is that Amazon is close to turning around its margin problem. Spending on tech and on the waived fees to promote the Amazon Prime loyalty program would be easing. Meanwhile, Amazon was quietly building up new, lower-margin revenue in its Web services division.

Some of those Web services -- offering data storage, computing capacity and its e-commerce code to programmers and sites -- could nurture startups into loyal customers, and even drive new retail business to Amazon through innovations like Flowser, a graphical enrichment to Amazon's site.

But there's also a bearish explanation: Amazon is continuing to face pressure from smaller, often cheaper e-tailers and its recent spending won't shore up revenue and profit as CEO Jeff Bezos had hoped. Further, the recent rise in Amazon's stock is a bizarre aberration, and it will take simply a piece of bad news to send the shorts descending on the stock like sharks on a sick whale.

Amazon has always taken a strong stand that innovation is a worthwhile investment, even if it takes away from near-term profit. It's a fight that many hoped it would win -- not just investors with a long position, but many other public tech companies.

If Amazon loses this fight -- if its recent spending doesn't deliver surprisingly strong returns that silence critics - it will be bad news not just for Amazon shareholders, but for other tech companies looking to invest in their future growth.