Why analysts are upping the numbers on Amazon

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What a difference a day makes. Yesterday, investors expected Amazon report earnings per share of 46 cents this year, which led to a comical price-to-earnings ratio of almost 1,100.

Today, expectations are for a profit of $1.21, a 220 percent increase, and the P/E is now down to roughly 475, even though third quarter operating income guidance is very wide, from a loss of $480 million to a gain of $70 million.

This is amazing, considering Amazon's profitability has been erratic and the company does not appear to have any new product launches (Remember the Fire phone?) scheduled for 2015.

And it doesn't stop there. Expectations are now for a big gain of $4.21 in 2016, which would bring the P/E down to roughly 140.

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The source of this enthusiasm isn't hard to spot: Amazon Web Services, its cloud storage business, and Prime membership, the key to its North American retail operations.

Both are growing. Fast. Revenues for Web Services were up 81 percent. Amazon hasn't broken out details for Prime membership, but everyone seems to believe it has at least 30 million members paying $99 a year, and that it will likely exceed 40 million by the end of the year.