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Amazon.com Inc. [stckqut]AMZN[/stckqut] delivered its most profitable quarter ever, topping last year’s record holiday period, thanks to surging sales from its lucrative cloud-computing business.

Despite a persistent reputation as a profit miser, Amazon turned in its fourth straight moneymaking quarter and expanded margins in its core retail business, as well as the Amazon Web Services division that rents computing power to other companies.

Superlatives abound: Its 28% sales growth was the highest since the second quarter of 2012, while its operating margin of 3.7% was its best in more than five years.

The cash cow driving these figures is AWS, a decade-old operation that pioneered the business of hosting computer servers for companies like Netflix Inc. [stckqut]NFLX[/stckqut] and the Central Intelligence Agency. AWS has become the go-to provider for a generation of startups, government agencies and other corporations seeking to offload computing power to Amazon’s thousands of servers.

The cloud division’s sales rose 64% to $2.57 billion. While that is less than one-tenth of Amazon’s overall revenue, AWS generated about 67% of the company’s operating income in the quarter.

In other words, AWS is supporting Amazon’s sprawling, 20-year-old business that spends billions of dollars in an effort to upend traditional brick-and-mortar retail by providing customers nearly everything imaginable in as quickly as one hour.

Source: Cloud Unit Pushes Amazon to Record Profit

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In recent weeks, speculation has mounted that Amazon.com Inc. [stckqut]AMZN[/stckqut] plans to launch a global shipping and logistics operation that will compete with United Parcel Service Inc. [stckqut]UPS[/stckqut] and FedEx Corp. [stckqut]FDX[/stckqut]

Asked about reports that the company was leasing planes and had registered an ocean freight booking business, Chief Financial Officer Brian Olsavsky downplayed Amazon’s ambitions last month in an earnings call. He said the company was simply looking to supplement its delivery partners — not replace them — during peak periods like the Christmas shopping season

A 2013 report to Amazon’s senior management team proposed an aggressive global expansion of the company’s Fulfillment By Amazon service, which provides storage, packing and shipping for independent merchants selling products on the company’s website. The report envisioned a global delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta, New York and London. The project, called Dragon Boat, is proceeding, according to a person familiar with the initiative, who asked not to be identified because the information isn’t public.

Source: Amazon Building Global Delivery Business to Take On Alibaba – Bloomberg

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Amazon.com reported its highest quarterly profit ever. Wall Street made the mistake of expecting even more.

The e-commerce giant reported fourth-quarter sales and earnings late Thursday that fell short of analyst expectations. Investors haven’t historically given much thought to profits at Amazon. They have instead focused on top-line growth with the expectation the company’s heavy investment would pay off at some undetermined point in the future.

But that had changed in recent quarters as Amazon’s rapidly growing cloud business, Amazon Web Services, posted significantly higher operating margins than the retail business. Now those profit hopes appear to have gotten ahead of themselves.

There is no question Amazon has become more profitable. Operating income was $2.2 billion in 2015 versus only $178 million in 2014. And operating margins at Amazon’s cloud business expanded to 28.6% from 25% in the third quarter and 16.9% in the fourth quarter of 2014.

Source: Amazon Doesn’t Deliver to Wall Street

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In the world of retail, there is Amazon.com [stckqut]AMZN[/stckqut], and there is everyone else. But while the challenges facing the latter group seem to mount daily, there are still some retailers whose turf looks defensible.

What do diamonds, cosmetics and crafting supplies have in common? For investors, they may be one bulwark against a charging Amazon.

Amazon’s sales have grown at a year-over-year rate of about 20% in recent quarters. To keep that up, it must be constantly expanding into new retail categories. Take, for example, its recent, push into grocery delivery and its efforts to expand its apparel and fashion-accessories offerings. Even items like furniture and mattresses are increasingly moving online, although Amazon itself doesn’t dominate those businesses—at least not yet. Indeed, few categories seem safe, particularly since Amazon’s investors don’t require it to be profitable.

But looking down the road, there are a few areas where investors can bet consumers still will be buying in brick-and-mortar stores.

One of these is diamond rings, and Signet Jewelers [stckqut]SIG[/stckqut] stands to benefit. The company’s roughly 3,600 stores, which operate under the names Kay Jewelers, Jared The Galleria of Jewelry and Zales, among others, are in the U.S., Canada and the U.K. They target midtier shoppers, with more than 50% of sales coming from the relatively recession-proof bridal business.

Matching a makeup color to skin tone is another shopping experience difficult to replicate online. Enter Ulta Salon, Cosmetics & Fragrance [stckqut]ULTA[/stckqut]. The company’s roughly 860 retail stores aren’t in malls.

Its stores require a bit more effort to get to. Still, Ulta has been able to successfully establish itself as a beauty destination, particularly among low-to-middle-income consumers. The company’s sales have grown in excess of 20% for the past four fiscal years. Some of that is reflected in its multiple of about 30 times fiscal 2016 earnings estimates. But consistency combined with strong profit growth is difficult enough to come by in U.S. retail that the premium is warranted: Earnings are expected to climb by 18% next year as Ulta continues to take share.

Just as shoppers might need to enter an Ulta store to get tips on cosmetics, people looking for crafting inspiration will likely keep coming to The Michaels Cos. [stckqut]MIK[/stckqut] stores. Michaels’s wide assortment of relatively infrequently purchased products, many made by lesser-known brands, makes it more defensible. And while craft supplies are discretionary, they aren’t typically big-ticket items, making them less sensitive to fears of a weak consumer.

Source: These Brick-and-Mortar Stores Are Amazon-Proof – WSJ

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More than 3 million people decided it was worth $99 to get that last-minute present delivered from Amazon Prime last week.

Amazon [stckqut]AMZN[/stckqut] announced Sunday that a staggering 3 million people joined the membership service during the third week of December, a major record for the company. More than 200 million items were shipped for free over the holiday season this year, Amazon said in a press release Sunday.

More than 3 million people signed up for Amazon Prime in the third week of December.

Amazon doesn’t say how many Prime members exist, but some have estimated as many as 13 percent of Americans – 41 million people – subscribe to the service. That means Amazon boosted its membership by more 7 percent in just week, something that’s pretty much unheard of for a retailer.

Source: Amazon dominates the holidays: Prime adds 3 million members in a week – Puget Sound Business Journal