Shares of rose on Thursday, hours before the Web retailer is expected to report impressive quarterly revenue gains from the holiday season, though 2011 profit margins may temper investor enthusiasm.

The company, which began as a Web bookstore and now is the world's largest online retailer, reported revenue gains of at least 39 percent in the past three quarters, and shares reached all-time highs last week, reflecting Wall Street's expectations.

The company will provide a first glimpse of its profit expectations for 2011 after the U.S. stock market closes. This could show that investments and a focus on revenue, rather than profit, will continue to temper margins.

Amazon's shares were up $6.07, or 3.46 percent, at $181.46 Thursday afternoon on the New York Stock Exchange.

William Lefkowitz, options strategist at New York-based brokerage firm vFinance Investments, cited aggressive call buying in the Amazon weekly call options expiring Friday.

Investors are expecting Amazon to move significantly in the aftermath of their earnings, Lefkowitz said, adding that among the most popular were the $180, $185, $195 and $200 weekly strike calls.

The premiums of these options are relatively rich given that they expire on Friday, suggesting optimism going into earnings, he said.

Analysts hope to see a payoff on investments that took Wall Street off guard in the second quarter of 2010, including new distribution centers.

Amazon has dismissed criticism about margin growth and focused on building its revenue through loyalty programs such as Amazon Prime, which charges $79 per year for unlimited free shipping. Such deals, it says, ensure that customers buy more products and turn to Amazon as their primary online retailer.

Recent positive results from Google Inc and eBay point to strong online commerce performance during the holiday shopping season, said Barclays Capital analyst Douglas Anmuth in a note published Wednesday.

We believe Amazon needs to report revenue at least at the high end of guidance ... even with some recent pullback in the shares, he wrote, adding that he expects margins to expand in the second half of 2011.

Amazon, like eBay Inc and Google, should have enjoyed a strong quarter as the economy improved. But a surge in claims for jobless benefits last week suggests any recovery would come in fits and starts.

The company, whose Kindle e-reader is the best-selling such device in the market, also operates a Web-hosting business and offers other services to businesses, such as fulfillment.

Regardless of how shares react to Thursday's results, some financial analysts will see Amazon as overvalued.

The company's stock price is 70 times expected 2011 earnings, far exceeding competitors in technology and retail.

If Amazon traded at the 15 times 2011 earnings multiple that the market gives to Apple Inc, its share price would be $52, wrote BGC Partners analyst Colin Gillis in a note to clients on Thursday.

And we note that Apple grew its revenue approximately twice as fast as our estimated Amazon December quarter revenue growth, said Gillis, who rates the stock a sell.

Analysts on average expect fourth-quarter revenue of $13.0 billion on earnings of 88 cents per share, according to Thomson Reuters I/B/E/S.

For the first quarter, Wall Street expects operating profit of $469 million on revenue of $9.31 billion. For 2011, analysts expect operating profit of $2.2 billion on revenue of $44 billion.

Amazon does not give forecasts for per-share earnings, focusing instead on operating profit.

(Additional reporting by Doris Frankel. Editing by Robert MacMillan)