Amazon wowed Wall Street with a surprise profit in the second quarter.
The ecommerce giant reported a net income of $92 million, or 19 cents a share.
Analysts were expecting Amazon to post a loss of 14 cents a share. At this time last year, Amazon posted a net loss of $126 million, or 27 cents per share.
How did Amazon pull off the big bottom line surpise?
Stronger than expected revenue across all of Amazon's businesses helped. But Raymond Baird analyst Colin Sebastian said Amazon's increasingly strong position in services businesses was helping to fatten up the bottom line.
The strength in the cloud business and third-party marketplaces, both of which have rich profit margins, were the real heroes during the second quarter, he said.
"Gross margins were well above expectations, that reflects more services revenues. That means AWS and third-party marketplace, those have much higher gross margins," said Sebastian.
AWS is Amazon's cloud computing business, which competes with Google and Microsoft. Third-party marketplace is Amazon's business selling other retailers' goods on its website.
It also appears there's "some element of expense control" at play during Amazon's recent quarter, Sebastian noted.
Wall Street cheered the financial results, sending Amazon's stock up more than 18 percent at $572.57 in after-hours trading.
Amazon has traditionally re-invested the money it generates into its business, and investors have grown accustomed to quarterly losses as Amazon spends money to expand and to capitalize on new opportunities.
Sebastian said that investors should not necessarily get used to a profitable Amazon, he noted.
"The key question is are they actually harvesting earnings now, or is it more just a pause in investment spending?"
