Amazon.com Inc. (NASDAQ: AMZN) has passed Microsoft Corp. (NASDAQ: MSFT) to become the third most valuable publicly traded U.S. company. It has pulled close to passing Alphabet Inc. (NASDAQ: GOOGL) for second place, behind only Apple Inc. (NASDAQ: AAPL).

Amazon’s market cap is $702 billion as of February 14. Alphabet’s is $740 billion and Apple’s is $849 billion.  Amazon has been the market’s favorite by far over the past year. Its shares are up 28% over the period. The Nasdaq is higher by 5%, while Apple’s shares are down 2% and Alphabet’s up 2%.

Amazon seems poised to continue its market success. That is based partly on strong earnings. As much or more is based on its leadership in cloud computing. Last year, the Amazon Web Services revenue rose to $17.5 billion from $12.2 billion in 2016. Operating income was $4.3 billion, up from $3.1 billion a year earlier.

The enthusiasm about Amazon also has a foundation in its expansion into groceries and consumer electronics, its Prime loyalty program and premium streaming entertainment. Year after year, the company diversifies, mostly successfully.

Prime is among Amazon’s most ingenious inventions. Most research shows that Prime members, who get free shipping on most orders and access to Amazon’s premium video library, buy more from Amazon than nonmembers. Amazon has indicated Prime is growing quickly, without giving numbers. It has been able to raise the base price for the service as well.

Amazon’s home intelligent assistant devices, led by Echo, have been a large success. Most research indicates these products are well ahead of similar ones from Apple and Google. And these devices are the future of home and entertainment management.

Amazon has made investments of hundreds of millions of dollars in content, original shows, for its streaming media business. Those investments will grow. The company is in a war with studios, Netflix and Apple. Netflix is the current leader, and Amazon’s investment in programming may not get a strong return. However, for now, the investment is mostly viewed as necessary and wise.

Amazon currently holds a spot among America’s most innovative companies, and by some measures may even top the list. Investor enthusiasm, fueled by the innovation, likely will take Amazon’s market cap ahead of Alphabet’s.

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