Online retailer Amazon.com Inc. (NASDAQ:AMZN) whose Kindle Fire tablet is one of the hot-selling products in this holiday season may have a tough time in convincing investors over its margins.

We believe Amazon's dominance will continue, that its market value will increase significantly, and that its investments are smart. However, we believe management views the current period in the Internet's evolution as 'Land Grab 2.0' and suspect this will lead to a period of low margins that outlasts investor patience, Canaccord Genuity analyst Michael Graham wrote in a recent note to clients.

Graham, who initiated coverage of the stock with a neutral rating, estimates pro forma operating margin of 2.8 percent in 2012, down slightly from 2011.

We believe this period of low margins will outlast investor patience, and we expect a volatile stock in 2012, said the analyst.

Amazon is having a hard time being a growth stock, as it is spending like a start-up instead of like a $100 billion industry leader.

With mature Wal-Mart Inc. (NYSE:WMT) delivering operating margins in the 5-6 percent range, the analyst believes 6 percent is reasonable expectation for a normalized operating margin for Amazon for the current period.

Over time, the analyst would expect Amazon's margin structure to be significantly higher than Wal-Mart's, perhaps in the 8-12 percent range. Although both companies have significant infrastructure requirements, the analyst believes Amazon's are smaller.

However, it will take some years before Amazon's growth rate slows down enough to allow this. The analyst's 6 percent mark is at the upper end of what the company has delivered over the past several years.

Amazon management guided to roughly a 1 percent operating margin for the fourth quarter. Stacking this against the 6 percent target indicates around $2.45 billion in Excess operating expenses in 2011, growing to $3.25 billion in 2012.

Taking into account the significant revenue growth, Graham believes that spending growth is outpacing even those robust results and estimates that in 2011 Amazon will outspend revenue growth by about $1.8 billion.

We believe the best times to own Amazon stock is when growth is good (pretty much always!) and margins are recovering or high. We believe a margin recovery will come, but we have a hard time seeing it happening in 2012, said Graham.

Shares of Amazon closed Friday's regular trading session at $193.03 on Nasdaq while Graham has a price target of $225.