Perils of Unknown for Investors Wading Into Amazon

When Amazon.com reported first-quarter earnings last week, the company surprised investors by revealing that its cloud computing unit, Amazon Web Services, was making a substantial profit, while its e-commerce business wasn’t as profitable as some thought. It was the opposite of what some had expected and a reminder that the inner workings of Amazon’s business remain a mystery to investors.

For the moment, Wall Street doesn’t care. Amazon’s stock rallied sharply after the results, continuing an upward trend since the start of the year. But with the stock trading at a sky-high valuation of 168 times next year’s expected earnings per share, investors may not always be so forgiving.