Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

We're back at a record high, as stocks rose on Friday, boosted by well-received earnings reports from some large corporations, including Amazon.com (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) (see below.) The S&P 500, and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES:^DJI), both gained 0.4%.

Streaming film and TV service Netflix (NASDAQ:NFLX) reported third-quarter results that delighted investors after the market close on Monday -- so why did the shares decline 9.1% the following day after gaining nearly 10% on Tuesday morning? The latest numbers confirm that Netflix is executing more than adequately on its long-term plan, and has plenty of growth ahead of it.

Revenues rose 22% year on year, to $1.1 billion, boosted by a worldwide member count that broke 40 million. Symbolically, the domestic member count of 31 million surpassed that of competitor HBO for the first time in the quarter, thanks to the buzz surrounding its original content, most prominently the Emmy-winning House of Cards, and Orange is the New Black.

The trouble with Netflix isn't the business -- it's the valuation the market is placing on it. CEO Reed Hastings hinted at this in the earnings letter and in the accompanying interview, comparing this year's run-up to that of 2003 (which was followed by a rout in 2004), and referring to "momentum-investor-fueled euphoria." Those comments, and a note from Bank of America Merrill Lynch that also questioned the stock's valuation, were enough to produce Tuesday's sell-off.

Reed Hastings ought to be commended for having the honesty to point this out -- something very few chief executives would have the courage to do. Long-term shareholders need not be concerned about the valuation, but prospective investors may want to heed his warning and wait for a more attractive entry point.

Netflix competitor Amazon.com also has what looks like a heady valuation, at 165 times next 12 months' earnings-per-share estimate. However, its lofty share price multiple did not stop investors bidding the shares up 9.4% on Friday on the back of its third-quarter earnings report.

More than a decade after the dot.com meltdown, Amazon remains a growth story, but it now sports a $166 billion market capitalization! Investors are willing to give CEO Jeff Bezos the benefit of the doubt that his vision will ultimately yield massive profits, and the past quarter's numbers were good enough to comfort them in that assessment.

To be sure, backing out the effect of changes in foreign exchange rates, total revenues rose 26% year on year to $17.1 billion, and although Amazon recorded its second consecutive quarterly loss, the amount narrowed from $274 million in the year-ago period, to $41 million. The company continues to invest heavily in fulfillment and content.

Like Netflix's Mr. Hastings, Jeff Bezos is a visionary, and his company is executing well, but it's hard to wrap one's head around Amazon's valuation. I'm not saying it's impossible to justify, but the level of uncertainty is very high and, as such, shareholders should be prepared for substantial volatility, even if they go on to reap good returns in the long run.

Software... err... "devices and services" company Microsoft(NASDAQ:MSFT) reported its September quarter results on Thursday afternoon. Unlike Netflix and Amazon, Microsoft is essentially a mature business, but its latest numbers demonstrate that it still has the capacity to surprise the market -- positively, that is -- with some healthy growth opportunities. Investors cheered the results, sending the shares up 6% on Friday.

Revenues adjusted for deferred sales rose 7% year on year to $18.5 billion, beating Wall Street's expectations. Earning per share of $0.63 also beat analysts' expectations of $0.54.

While the focus with Microsoft has been on its laggard status in consumer mobile devices and operating systems, and the decline of the PC, the standout division in the last quarter was Commercial, which sells to businesses. (Following a corporate reorganization announced late in the summer, Microsoft broke down its results between Devices and Consumer, and Commercial for the first time.) Sales of PCs in this segment actually rose for the second quarter running, contributing to 10% revenue growth in Commercial.

Microsoft doesn't have the growth potential of Amazon or Netflix, but with a stock at less than 13 times next 12 months' earnings-per-share estimate, it doesn't need to for shareholders to make out quite decently.

Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on Twitter @longrunreturns. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.