Tech giant Amazon (NASDAQ: AMZN) smashed expectations last quarter, showing it made big improvements in profitability. The good news for investors is that this doesn't look to be a one-off result. Amazon's margins are stronger, especially in its largest segment.

That data point has investors impressed with the company and buying the stock again. Here's why.

In the midst of Amazon's supersized growth during the pandemic, the company, along with others in the tech industry, hired staff aggressively. Ultimately it overestimated how strong demand would be and ended up adding too many resources. That led to worsening margins, particularly in the company's North America operations, which account for the bulk of Amazon's overall revenue.

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Source Fool.com