Wall Street’s first reaction to the Amazon.com Inc. (NASDAQ: AMZN) earnings release was that its extraordinary revenue increase of 22% was as astonishingly great as it was unexpected. The second was that Amazon continues to lose money, and that the trend has to stop. A third reaction was that it is fine for Amazon to operate in the red if the long-term visions of founder and CEO Jeff Bezos pay off. If not, the stock will plunge at the first sign of a major mistake, as it has in the past.

While investors sift among the possibilities of Amazon’s evolution, the most likely is that Bezos has moved Amazon into at least one business that could be as much a home run as retail e-commerce. That means more losses, and ones that may increase.

The company said:

Net sales increased 22% to $15.70 billion in the second quarter, compared with $12.83 billion in second quarter 2012. Excluding the $392 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales grew 25% compared with second quarter 2012.

Net loss was $7 million in the second quarter, or $0.02 per diluted share, compared with net income of $7 million, or $0.01 per diluted share, in second quarter 2012.

Virtually every attempt by Amazon to promote the positive side of its earnings centered on the success of its e-commerce operations, as well as expansion of its hardware and media initiatives. The company also pressed the wisdom of its decision to challenge Apple Inc. (NASDAQ: AAPL) and Netflix Inc. (NASDAQ: NFLX) in the streaming premium content business. The reactions to Netflix earnings were negative enough that Bezos should have left that initiative somewhere in the shadows.

Barely mentioned was Bezos’s plain to dominate the cloud computing sector. He has hinted in the past that Amazon Web Services (AWS) eventually would pass the company’s consumer initiatives in revenue. However, there was scant evidence of that. While product sales reached $12.7 billion in the quarter, service sales were only $3 billion. However, a closer look at the sales shows that while Amazon’s traditional business grew at an 18% rate, its service business expanded by almost 50%. Granted, AWS is only part of the services sector, but it is apparently its fastest growing. However, if Bezos wants to press its opportunities, he might offer investors a more plain-spoken description of its potential. Rather, his first mention of AWS can only be understood by IT experts:

Amazon Web Services (AWS) became the first major cloud provider to achieve FedRAMP Compliance which recognizes the ability of AWS to meet extensive security requirements and compliance mandates for running sensitive US government applications and protecting data. FedRAMP certification simplifies and speeds the ability for government agencies to evaluate and adopt AWS for a wide range of applications and workloads.

It is hardly a way to trumpet the strategy that Amazon will have the dominate position in cloud computing, but Bezos has a habit not doing enough to explain to Wall Street why it should stay with Amazon.

What is the investor left with as he digs through Amazon’s numbers to see the core of its future plans? Precious little, which is the way Bezos wants it. After years of selling the Kindle, he still refuses to offer unit sales numbers. However, Bezos sits on $8 billion in cash. His traditional operations are apparently cash positive. The growth rate of these traditional operations, which now include hardware and media, cannot be enough to sustain investors optimism indefinitely. Bezos needs to be well along the road in the development of his next tremendous initiative. Barely mentioned, that initiative is AWS. There are countless observations that the cloud is the future foundation of storage and commerce. And Bezos is, based on the numbers, sneaking up on it one quarter at a time.

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