Amazon.com is a retail powerhouse. But why are investors so enamored with its shares as it continues to produce disappointing profit growth?

FORTUNE -- Ah, Wall Street. You're always surprising us, aren't you? When Amazon.com reported earnings on Monday, you did the opposite of what we might expect. The online retailer's profits were down -- below expectations, even -- and yet you decided that the appropriate response was to bid up the stock, which rose from $181 to $195 as a result. While I am well aware that the expectations game is fraught with complication, can we not just agree that a stock should go down when the company disappoints, and up when it surprises? What the hell, people?

Jeff Bezos, big spender.

Of course, that was a gross simplification. Amazon, the clear king of online retail, did have a lot of good news to report. Like the fact that the company's North American sales rose 45% in the quarter versus last year. Total sales grew an almost-as-impressive 38%, to $9.9 billion. You've got to give it to these guys -- Amazon is an unmitigated retail success story.

There are lots of other positives as well. They have a pristine balance sheet. They have a patient investor base that's letting them spend, spend, and spend on attracting and maintaining market share at the expense of short-term profits. That's largely because they have demonstrated an ability to turn those investments into market share gains. The last time Amazon (AMZN) decided to ramp up R&D, they came up with the Kindle, cloud computing, and even parts of their current video streaming technology. Investors are clearly hoping for more of the same.

"The reason the stock went up is because people have seen this movie before," says Citigroup analyst Mark Mahaney. "If you'd bought the stock in the 2004 to 2006 investment cycle, when everyone else was selling, you would have profited immensely. These are offensive investments, not defensive ones."

Mahaney is not alone in his bullishness. In fact, the majority of Wall Street analysts covering the stock rate it a buy. The bull case is a simple one: Amazon is taking market share in a part of the retail industry -- e-commerce -- that is taking market share itself, while simultaneously expanding around the globe. What's not to like? More