Half of Google and Amazon's Q1 AI Profits Came From Anthropic

Alphabet and Amazon each posted blowout Q1 2026 earnings this week, but a closer look at the numbers shows something striking: nearly half of the reported profit at both companies came from rising marks on their stakes in Anthropic, not from their core businesses. Alphabet booked a $36.9 billion equity gain on Anthropic. Amazon booked $16.8 billion. Together, that's more than $53 billion in profit driven by one private AI company.

The numbers landed in the middle of an already-heated debate about how much of the AI boom is showing up in actual product revenue versus paper gains on private holdings.

Why this matters

When the largest tech companies in the world are reporting record profits, investors generally assume those profits are coming from the products and services those companies sell. That's no longer a safe assumption.

Alphabet's $62.6 billion Q1 profit included a $36.9 billion gain from updating the value of its private equity holdings, primarily Anthropic. That's more than three times the prior peak for that line item. Amazon explicitly disclosed that its $16.8 billion in non-operating gains from Anthropic accounted for more than half of its pre-tax profit for the quarter.

Strip out the Anthropic gains and both companies still made money — Google's underlying business is enormous and AWS is growing fast — but the headline profit numbers and the stock reactions to them are being shaped substantially by the mark on a single private investment that none of them control.

How the gains got booked

Both companies hold sizable equity stakes in Anthropic. Alphabet's position has grown through a series of investments culminating in last week's announcement that it will commit up to $40 billion in cash and compute, $10 billion of which is going in now at a $350 billion valuation. Amazon's position dates back to its initial $4 billion investment in 2023 and has been topped up multiple times — total committed capital is around $8 billion, with the position now reportedly worth more than $70 billion on Amazon's books.

Under U.S. accounting rules, public companies generally have to mark their equity stakes in other companies to fair value each quarter. When the underlying company raises money at a higher valuation — as Anthropic did at $380 billion in February and is now reportedly negotiating at $900 billion — the holders revalue their stakes upward and book the unrealized gain through net income.

Those gains are real on paper, and they flow through to reported earnings, but they aren't cash. Alphabet and Amazon haven't sold any of their Anthropic shares.

The numbers

Alphabet's Q1 report: total profit of $62.6 billion, up 81 percent year over year, with $36.9 billion of that coming from "other income" tied largely to revaluing private equity stakes. Stripping that out, operating profit was still strong but the eye-popping headline figure was driven by the Anthropic mark. Alphabet's market cap touched an all-time high after the report, briefly crossing $4.4 trillion.

Amazon's Q1 report: net sales of $181.5 billion (up 17 percent year over year), AWS posting its fastest growth in fifteen quarters, and reported earnings per share of $2.78 versus an expected $1.64. The earnings release explicitly called out $16.8 billion in pre-tax gains from "our investments in Anthropic" included in non-operating income — making the Anthropic mark the single biggest swing factor in Amazon's profit beat.

Both reports were celebrated as proof that AI is paying off for the cloud hyperscalers. The Anthropic gains complicate that narrative.

Industry impact: the AI bubble debate

The Fortune report — which crystallized the concern by putting "half of AI profits" in the headline — touched off the most pointed version of the bubble debate that has been simmering for months. Skeptics argue that if the largest tech companies are generating a meaningful share of their reported profits from circular AI investments rather than AI revenue, that's a sign the real economic returns aren't yet matching the capital being deployed.

Defenders of the dynamic point out that Anthropic's revenue is genuinely growing — to $30 billion annualized, by the company's own disclosure — and that Big Tech's ownership of frontier AI labs is strategic, not financial engineering. Google and Amazon would each rather own a piece of the leading AI labs than rely entirely on their own internal models, and the equity gains are a side effect of that strategic positioning.

The honest read is somewhere in between. AWS and Google Cloud genuinely sell more services because Anthropic spends heavily on compute. Anthropic's fundraising marks reflect real customer demand for Claude. But the magnitude of the equity-driven profit contribution is large enough that headline numbers shouldn't be read as straightforward AI revenue prints.

What's next

Watch the Q2 reports. If Anthropic closes a round at $850–$900 billion, both Alphabet and Amazon will mark their stakes up again, likely producing another large round of equity gains. Public-market analysts have already started building those gains into models, but the reported figures could still surprise to the upside or downside depending on the final terms.

There's also a regulatory and disclosure dimension. Some investors and analysts have called for clearer separation in earnings reports between operating profit and gains on private equity holdings, particularly when those holdings are concentrated in a single name. Both companies disclose the gains, but they flow through net income in a way that can mask the underlying trajectory of the operating businesses.

Finally, there's the long-term question of what happens when these stakes are eventually monetized. If Anthropic goes public — there's no near-term IPO timeline, but the question is being asked — the conversion from paper marks to realized cash could be one of the largest equity events in tech history.

What industry insiders are saying

Reaction across financial X has been split along ideology. Bears have pointed to the Anthropic-driven earnings as further evidence of an AI bubble built on circular financing. Bulls have responded that strategic equity stakes in frontier labs are exactly what shareholders should want from their cloud providers, and that the underlying compute revenue makes the structure rational.

Most professional analysts have struck a middle note: useful to know how much of the print is paper, but the underlying AI businesses at both companies are also accelerating. The Anthropic gains explain the size of the beat, not the existence of one.

The bottom line

Alphabet and Amazon both had outstanding underlying quarters. They also both had a single private equity holding that contributed tens of billions of dollars to reported profit. Investors and reporters who care about the actual operating performance of these companies need to read past the headline EPS, dig into the segment data, and treat the Anthropic gains as what they are: real, unrealized, and concentrated in one bet that could move just as sharply in the other direction. Right now the AI tide is lifting everything; the next time Anthropic gets a flat round or a down round, those line items will work in reverse.