Watch For Amazon's Video Announcement

Investors' risk appetite is healthy right now -- in the sense that it is alive and kicking, not necessarily that it is fully justified -- as the benchmark S&P 500 set a new record high yesterday. It's not just a U.S. phenomenon, either: Today, the FTSE All-World index hit its best level since the height of the global financial crisis. This morning, U.S. stocks are roughly unchanged, however, with the S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES: ^DJI  )  both up 0.02% as of 10:15 a.m. EDT. Investors and analysts, meanwhile, are waiting for Amazon.com (NASDAQ: AMZN  ) to provide the market with an update on its video business today.

What can we expect from Amazon today in regard to its streaming video activity? A run-of-the-mill business update or a game-changing announcement? There is speculation that the e-tailer will introduce a set-top box that would enable users to stream content to their televisions. This would cut out third-party hardware providers such as the popular Roku and it could put Amazon one step closer to becoming the disruptive actor that fundamentally alters the way people watch television. (To date, no company has really cracked that nut.)

Last month, The Wall Street Journal, reported that Amazon rival Apple (NASDAQ: AAPL  )  was in talks with cable giant Comcast to offer a streaming television service via an Apple set-top box. However, these talks aren't at an advanced stage, and given the issues that remain to be ironed out, it's not clear the two companies will ever reach an agreement.

Meanwhile, between the subscriber base to its Prime two-day shipping service (which also includes access to Prime Instant Video) and its production of original content, Amazon is in an enviable position to experiment with new ways to deliver or bundle video content and establish a beachhead in customers' living rooms. Amazon recently raised the annual fee on Prime to $99. As Citi analyst Mark May wrote in a note last week, "it does seem clear that Amazon continues to focus on innovation, investment and growth in the areas of digital media (including video) and digital media devices."

For the consumer and the marketplace, Amazon's drive to innovate represents nothing but upside, while longtime investors in the company have certainly been well rewarded. However, it's very difficult to peg Amazon's valuation and, therefore, the prospects for investors going forward -- certainly, the stock's valuation via traditional metrics such as price to earnings are not particularly helpful. Nevertheless, betting against the company and its visionary CEO Jeff Bezos doesn't look like a bright idea.

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