Amazon (AMZN) was built on cheap goods and convenience — a strategy that, in business speak, translates to high volume but razor-thin margins.

For some time, though, AMZN stock analysts and investors have applauded the company’s foray into the cloud space (via Amazon Web Services, or AWS) for its potential to offer not just big-time growth potential, but more robust margins.

Of course, AMZN is notoriously quiet about the precise details of its cloud business (and about, well, whatever it wants to be quiet about) … so Amazon stock investors can’t dig through its filings and find AWS margins or revenue broken out.

But judging by the fact that Amazon, along with public cloud rivals Google (GOOG) and Microsoft (MSFT), have spent the last few weeks stumbling over each other in a rush to slash prices and either grab or retain customers, it seems like a pretty safe bet to say that the public cloud might not be the margin savior it was once thought to be.

AMZN Wants More Customers, Not Higher Margins

In case you missed it, the cold, hard numbers for these cloud price cuts are as follows:

• Amazon announced broad-based cuts for AWS ranging from 36% to 65%.
• Google lowered Google Cloud Platform prices by 32% to 85%.
• Microsoft is cutting prices on various services by 27% to 65%.

Amazon has been able to cut cloud prices before as margins remained flat — at least according to the estimates of AMZN stock analysts. But as we shift from price cuts to an all-out price war, it seems likely that margins aren’t as much of a consideration.

As a piece in Barron’s put it, “While some of the price cuts can be attributed to cost savings enabled by Moore’s Law and economies of scale, acceleration of price cuts signals a greater emphasis on winning customers.”

This mind-set, which focuses on getting more customers, runs the core Amazon business. But the company’s cloud offerings weren’t originally viewed as a mere extension of the high-volume, low-margin AMZN norm. Instead, Amazon stock investors were excited by the fact that Amazon Web Services was different in that it held the potential for more robust margins.

That thesis is getting a lot more complicated these days.

As Serdar Yegulalp at InfoWorld put it, the price war means that “cloud services will be forced to compete based on what business features they offer and how tightly they lock in customers, and they will be competing with companies that provide highly specialized types of clouds.”

Similarly, GigaOM’s Derrick Harris suggested years ago that, if Amazon stock investors truly want this slice of the company’s offerings to plump up the company’s profitability, they should be rooting for AMZN to bulk up its cloud offerings with more managed services.

But that path doesn’t come without a price: more investment in the cloud. Barron’s estimates that capital spending on cloud by Google, Amazon and Microsoft could increase by a whopping 93% by next year.

Amazon: Always Investing

Even that reality is pretty darn familiar for AMZN, though; Amazon stock isn’t just about low margins, but loads and loads of investments.

The good news, I guess, is that Amazon stock investors know exactly what they are getting. Whether we are talking about regular warehouses or data warehouses, clothes or the cloud, Amazon.com or AWS, betting on AMZN is betting on a low-margin company that continues to shell out lots of cash on investments we can only hope will pay off.

At this stage in the game, the cloud is nowhere close to changing that.

As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.