Amazon.com, Inc. (NASDAQ:AMZN) keeps growing and demolishing those in its path. But there’s a reason, and Amazon stock owners are ignoring it.

When privately-held grocery chain Albertson’s announced earlier this week it was acquiring Rite Aid Corporation (NYSE:RAD), the buyout was tacitly scored as another victory for Amazon. See, Amazon stock owners recognized the buyout for exactly what it was: another desperate team-up to slow down the never-ending invasion of the e-commerce giant.

It’s too little, too late for Rite Aid and Albertson’s to collectively regain relevancy with consumers at this point. But smaller companies simply failing to keep up with the times is not the reason Amazon is going to continue to roll over other, less-impotent organizations that stand in Jeff Bezos’ way.

The key reason Amazon is able to keep its competitors in check is simple: AMZN shareholders don’t care if the company ever turns a meaningful profit.

A Good Day for Amazon Stock

The timing of several pieces of news couldn’t have been better scripted… if you own Amazon stock, that is.

On Tuesday, Albertsons and Rite Aid announced they were teaming up under mounting pressure in both of their respective markets.

And it was widely pointed out that Amazon.com has already launched a private-label line of over-the-counter health products. Pain relief, allergy treatments and cold medicines sold under Amazon’s “Basic Care” brand already allow consumers to circumvent drugstores in some situations (and possibly more situations in the future). And Amazon’s acquisition of Whole Foods has already applied pressure to Albertson’s in the grocery sector.

Simultaneously, Walmart Inc (NYSE:WMT) dished out a fourth quarter earnings miss on Tuesday.

Analysts largely blamed the miss on a ramped-up effort from Amazon.com to keep the world’s biggest brick and mortar retailer from encroaching any further onto its turf. Underscoring that theory? Walmart’s online sales growth slowed to a four-quarter low of only 23%.

A superficial assessment leads to the conclusion that Amazon.com simply has a scale — and lacks the overhead costs — that don’t apply to Walmart, Rite Aid, Albertsons or any of the other outfits currently fighting an uphill battle against the online behemoth.

But that’s not the reason the AMZN stock has outperformed shares of most other names though. Amazon stock owners simply aren’t demanding profit from the company in the same way they would from any other.

A Look at Amazon’s Profits

Amazon spends money at a pace that would terrify shareholders of any other company, all in the name of growth.

Fans and followers (and owners) of AMZN stock will argue the premise, though most of them would struggle to refute it.

And the question that’s never answered is, when might the company no longer need to spend almost every penny it makes to buy the next quarter’s or next year’s revenue growth?

The hard data speaks for itself. Yes, Amazon just came off its best, most profitable quarter ever thanks to Amazon Web Services.

Take a closer look at last quarter’s and the full-year income statement though. Though operating income for Q4 was up slightly year-over-year, it only improved from 2.8% to 3.5%. Operating income for the full year was down despite the 30% growth in sales.

That’s a non-GAAP measure by the way. When you factor in all the debt and liabilities the company assumed to drive that growth, Amazon.com only turned 2.1% of its revenue into a profit. And sadly, that’s more or less been the norm for years.

Amazon Stock Owners Repeated Let It off the Hook

For perspective, Walmart’s net profit margin for the past four collective quarter is 2.3%. Walgreens is a little better than 3.0%. Target Corporation (NYSE:TGT) sports a net profit margin of 7.2%. Its Chinese counterpart Alibaba Group Holding Ltd (NYSE:BABA) has turned nearly 30% of its trailing twelve-month revenue into net profits.

There aren’t many (if any) other companies the market would let skate by on the thin margins Amazon habitually produces. Especially with a stock valued as frothily as AMZN is.

Amazon.com has done a fantastic job of selling the dream of a beautiful future… but that future always seems just a bit further down the road.

Tepid net margins aren’t the end of the world for the company, to be fair. But with Amazon stock valued about four times as richly as those four rivals, serious questions start to surface.

And it gets worse.

When factoring in the costs of all the hardware needed to keep AWS up and running, the company was actually cash-flow-negative last quarter (and has been for a few quarters now).

Nothing Lasts Forever

Some would say that profits don’t matter as long as the top line perpetually gets bigger. From a certain perspective, that’s true. Any stock that’s moving higher is a good investment as long as it’s moving higher. And AMZN stock is on the rise, driven by monster-sized revenue growth.

At some point, however, the sustainability of that revenue growth has to be questioned.

When margins are paper thin as they are for Amazon.com and when the new projects never seem to end, even a modest headwind — perhaps stemming from saturation — can crimp profits rather dramatically.

Again, it doesn’t matter yet.

As long as smaller players and even bigger players are on the defensive and AWS margins continue to widen, investors will see that as enough of a victory to remain bullish on AMZN stock.

Don’t be fooled though. Sales don’t inherently translate into profits, and they certainly haven’t done so in a big way for Amazon.

In the meantime, while Amazon Web Services is contributing more and more to the bottom line, that arm could soon hit its own profit headwind. Per a recent review of the cloud market done by RightScale, Microsoft Corporation (NASDAQ:MSFT) is picking up new cloud customers just as quickly as Amazon Web Services is.

This points to a brewing price war that Amazon will struggle to fund. Its e-commerce arm will offer little to no help in that regard at its current pace of profits. Microsoft boasts net profit margins of around 10%. And the company isn’t gaming its cash flow measures to make it look more profitable than it effectively is.

Bottom Line for Amazon Stock

Despite the well-orchestrated chorus of bullishness, it’s easy to win market share when you don’t care about turning a profit.

Things may change, though, when top-line growth isn’t so easy and investors demand earnings from Amazon in lieu of growth. And, that time is coming sooner or later.

Just something to think about as you’re cheering the competition-killing rampage Amazon is on.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.