Amazon.com, Inc. (AMZN), Wal-Mart Stores, Inc. (WMT): Spend Now, Earn Later…Maybe

When it comes to video, Netflix, Inc. (NASDAQ:NFLX) is the king. This Internet streaming pioneer has seen its top line explode over the last decade, going from $270 million to over $3.6 billion last year. The bottom line had been on a steady climb, too, reaching about $4.15 a share in 2011. Aggressive spending on international expansion and content, however, took 2012 earnings down to about $0.30 a share, levels last seen in 2004.

That said, Netflix, Inc. (NASDAQ:NFLX) just announced second quarter earnings of about $0.50 a share. That’s a solid showing and suggests that management is now paying more attention to the bottom-line. Unfortunately new customer growth lagged Wall Street’s expectations, causing the shares to sell off.

Even after the earnings-led sell-off, however, Netflix, Inc. (NASDAQ:NFLX) shares are priced for near perfection with a PE above 300. And the spending isn’t likely to abate anytime soon. So growth investors should probably stay on the sidelines or look at content providers like Disney.

That said, Netflix, Inc. (NASDAQ:NFLX)’s aggressive investments have forced Amazon into exclusive deals and original content creation, too. That’s adding additional pressure to the bottom-line that isn’t going to let up. And Netflix, Inc. (NASDAQ:NFLX) isn’t the only participant in the space that Amazon has to keep up with.

The Stakes are too High

Amazon is facing high stakes at every table at which it’s playing. Although the promise of future profits is high, the risk that they never show up is increasing. Investors should consider Wal-Mart or Microsoft, two players investing in their futures and making money at the same time. Although shares of both have advanced this year, they aren’t anywhere near the lofty levels of Amazon.

The article Spend Now, Earn Later…Maybe originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Netflix. The Motley Fool owns shares of Amazon.com, Apple, Microsoft, and Netflix. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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