Big Tech's AI bets are making corporate profits look much bigger than they are
Microsoft, Amazon and Alphabet booked billions in paper gains from their stakes in Anthropic, OpenAI and SpaceX. Strip those out and earnings growth looks a lot more ordinary.
Key points
- Amazon recorded a $53.4 billion gain in Q2 2025, "primarily from" its Anthropic investment, inflating its earnings growth from roughly 17% to more than 240%.
- Alphabet's bottom-line growth surged nearly 300% in the same quarter, but without gains from SpaceX and Anthropic it would have been closer to 23%.
- Microsoft added about 10 percentage points to its earnings growth from an Anthropic stake gain, plus a separate $480 million gain on its OpenAI investment.
- S&P 500 earnings grew roughly 48% year-on-year in the most recent quarter; remove Alphabet and Amazon's private-company gains and that figure drops to around 29%, according to data firm LSEG.
- Anthropic and OpenAI have each filed confidentially with the SEC, the US markets regulator, and are expected to list on public stock exchanges within the next year.
When Amazon reported its latest quarterly results, earnings had jumped more than 240% compared with a year earlier. Sounds extraordinary. It was, but not quite in the way you might think.
The company booked a $53.4 billion gain, mostly tied to the rising value of its stake in Anthropic, the AI company behind the Claude chatbot. That single paper gain, an accounting entry reflecting that Amazon's investment is worth more on paper than it was before, accounts for almost all of the headline growth.
Remove it and earnings grew roughly 17%. Still decent. Nothing close to 240%.
What is actually going on here?
Amazon, Microsoft and Alphabet (Google's parent company) all own stakes in private AI firms. When those firms' valuations climb, accounting rules require the investor to record the increase as income, even if no shares were sold and no cash changed hands. It shows up in profits. It flatters the numbers.
Anthropic, valued at just under $1 trillion in private markets, counts Amazon and Google as major backers. OpenAI, also valued near $1 trillion, counts Microsoft and Amazon among its investors. Alphabet also holds roughly a 5% stake in SpaceX, Elon Musk's rocket company.
Those three names drove a big chunk of the S&P 500's apparent earnings boom. Overall earnings for companies in that index grew around 48% year-on-year in the most recent quarter, according to LSEG, a financial data firm. Strip out just Alphabet and Amazon's private-company gains and the real number is closer to 29%, far nearer to the 24% analysts had predicted.
"The headline earnings numbers were very much inflated by equity gains in OpenAI, Anthropic and SpaceX," Gil Luria, head of technology research at D.A. Davidson, told CNBC Tech.
Should ordinary investors be worried?
Not panicked, but informed. These paper gains can reverse just as fast as they appear.
SpaceX's private share price is already down roughly 50% from its peak since its IPO. Because Alphabet holds that SpaceX stake, analysts expect Google's parent to report a sizable loss on the same investment when it files results for the September quarter. A successful Anthropic stock market listing, expected within the next year, could soften that blow, but nothing is guaranteed.
Most professional analysts already strip these one-time items out when building their forecasts. The problem is that headline figures, the ones quoted in news alerts and earnings calls, do not always carry that caveat.
| Company | Reported earnings growth | Growth without AI stake gains | Key investment |
|---|---|---|---|
| Amazon | +240%+ | ~17% | Anthropic ($53.4 bn gain) |
| Alphabet | ~+300% | ~23% | SpaceX + Anthropic |
| Microsoft | Elevated | ~10 pp lower | Anthropic + OpenAI ($3.2 bn net, $480 m OpenAI gain) |
Survivorship bias is worth naming here. We are reading about the quarters where valuations went up. The reversals get quieter coverage.
The honest takeaway: when a tech giant reports a blowout quarter, check whether the profit came from selling software to customers, or from a spreadsheet entry on a stake it has not sold yet. Those are very different things.
Common questions
Do these paper gains mean anything real for employees or customers?
Not directly. The gains do not represent cash in the bank for the company, and they do not fund new products or pay salaries on their own. They can, however, boost a company's stock price, which affects employee equity compensation and the company's ability to borrow or make acquisitions.
Will this distortion keep happening?
For as long as Microsoft, Amazon and Alphabet hold large private stakes in fast-growing AI firms, yes. Once Anthropic and OpenAI list on public markets, their valuations will shift daily and the swings, up and down, will show up in Big Tech earnings every single quarter.
