Big Tech Books $160 Billion Windfall on AI Stakes
Alphabet, Amazon, Microsoft and Nvidia have built equity positions in companies including OpenAI, Anthropic and SpaceX as they compete for exposure to the artificial-intelligence boom. Under U.S. accounting rules, quarterly changes in the fair value of such holdings can flow through profit and loss. The resulting paper gains lift pre-tax earnings but do not represent operating revenue or fresh cash, complicating assessments of the sector’s underlying profitability.
The four technology groups booked more than $160 billion in investment-related gains in their latest reporting periods, the Financial Times reported on Aug. 30, more than double the roughly $69 billion recorded in the previous quarter. For the three months ended June 30, Alphabet’s other income more than doubled to $97.9 billion and Amazon’s more than tripled to $53.4 billion. Nvidia reported $7.7 billion of other income for the three months through July.
All Coverage
3 original reportsThe Backstory
The history behind this eventAI Stake Gains Inflate Big Tech Profits
Microsoft, Amazon and Alphabet have paired capital investments in leading AI developers with large cloud-computing agreements. Microsoft holds a major stake in OpenAI, Amazon and Alphabet back Anthropic, and Alphabet invested early in SpaceX. When funding rounds or public listings establish higher valuations, accounting rules can send realized or unrealized gains through reported earnings even though they do not reflect operating cash generated by Azure, AWS, Google Search or other core businesses. The marks can also distort aggregate S&P 500 profit growth.
Results released from July 22 through July 30 showed Alphabet earned $112.1 billion, including a $98 billion net gain largely tied to equity holdings such as SpaceX and Anthropic. Amazon posted $62.6 billion of net income after recording $53.4 billion of pretax non-operating income, mainly from Anthropic investments. Microsoft reported $35.8 billion of net income, including a $3.2 billion Anthropic gain and a $480 million benefit from OpenAI. Yardeni Research estimates that stripping out mark-to-market gains cuts second-quarter S&P 500 earnings growth to 22.3% from 35.8%.
Subscribe to Mark Radar Weekly
Every Friday, the week's strongest signals in your inbox. Unsubscribe anytime.
If you search news on Google, you can set Mark Radar as a preferred source—our coverage will show up more often in your results. Set as preferred source on Google →