There's no denying which end of the income statement (Nasdaq: AMZN) is gunning for in recent quarters. It wants to grow its top line. If margins suffer as Amazon tries to outfit more bibliophiles with e-readers and make its digital streams stickier by including them at no additional cost, so be it.

Last night delivered more of the same. Earnings fell 8% to $0.41 a share, even though net sales soared 51% to $9.9 billion. Analysts figured that the leading online retailer would earn just $0.35 a share on $9.4 billion in net sales. In other words, investors are actually applauding the margin crunch, because Amazon landed well ahead of the prognosticators on both fronts.

The margin contraction parade will continue. Amazon's guidance for the current quarter calls for operating income to fall by 37% to 93% -- yes, 93% -- with net sales targeted to grow by 36% to 47%.

What can cause Amazon's profitability to continue to dwindle? Could it be the rumored tablet introduction and Kindle updates? Could it be Amazon's heightened push to challenge Netflix (Nasdaq: NFLX) in digital streaming? It won't come cheap, as it probably found out when it recently added 2,000 titles from CBS (NYSE: CBS) to its Prime streaming offering. It also won't be alone, as Wal-Mart (NYSE: WMT) is finally integrating its VUDU digital video rental and purchase offering to

A few years ago, this is the kind of quarter that would have crushed the stock. Instead, the stock barreled toward fresh all-time highs last night. Investors finally see the big picture at Amazon, and it's one that values net sales and stickiness over the bottom-line growth that may be absent today but will catch up quickly in the future if Amazon's blueprint holds up.

Is Amazon a good buy here, or is it too expensive? Share your thoughts in the comment box below.

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