Amazon's (AMZN) profits jumped in the second quarter despite sales falling short of Wall Street forecasts, topping $2 billion for the first time.
The earnings results show the e-commerce giant remains dominant in retail sales while continuing to grow its higher-margin departments, including cloud computing. It's also starting to reap the benefits of its vast size as costs decline.
"Amazon posted a blow-out quarter by virtually any measurement," Charlie O'Shea, Moody's lead retail analyst, wrote in a note. Despite the slight miss on sales, "We view this as more of a 'wait for Prime Day' issue on the part of the consumer than anything else," he said.
The online retailer posted revenue of $52.8 billion in the period, less than the $53.4 billion expected by analysts surveyed by Zacks Investment Research. Its profit increased to $2.5 billion in the second quarter, or $5.07 per diluted share, compared with net income of $197 million in second quarter 2017.
That was roughly double analysts' expectations. The news bumped Amazon's stock up 3.5 percent in after-hours trading, to $1,871 a share.
Just over half of Amazon's revenue came from online sales, while 11 percent came from Amazon Web Services. Subscription services (including Prime), sales in physical stores and third-party seller fees made up the rest.
The results show that Amazon is finally becoming profitable -- a relief to investors after the company maintained razor-thin profits in order to build out its capacity.
"The profitability trajectory appears to be accelerating quicker than expected which given the leverage in the Amazon model is a 'potential game changer' that could translate into further multiple expansion," Daniel Ives, head of technology research at GBH Insights, wrote in a note.
In the second quarter, Amazon brought savings for Prime members to all Whole Foods and expanded Whole Foods delivery in more cities. It also acquired online pharmacy, marking its first official .
The quarter did not include results for Amazon Prime Day, but the retailer said the July 16 event was "Amazon's biggest global shopping event ever," signing up more new Prime members than any other day in the company's history. Members bought more than 100 million products that day, Amazon said.
Amazon shares have climbed 55 percent since the beginning of the year, while the Standard & Poor's 500 index has increased 6 percent. In the final minutes of trading on Thursday, shares hit $1,807.76, an increase of 72 percent in the last 12 months.
The Associated Press contributed reporting.