A Fortune analysis published as the dust settled on Big Tech's earnings week argues that the headline AI profits at Alphabet and Amazon last quarter weren't really earned in the cloud or in advertising. They were earned on paper, on a single line item: the rising value of their stakes in Anthropic.
Alphabet reported an 81% jump in net income to $62.6 billion in Q1 2026. According to Fortune, roughly $28.7 billion of that — close to half — came from a fair-value adjustment on private-company equity, primarily Anthropic, in which Alphabet holds an estimated 14% stake. The $36.9 billion equity-securities gain Alphabet booked is reportedly more than triple its previous peak.
Amazon's filing was even more direct. The company stated that its first-quarter net income "includes pre-tax gains of $16.8 billion included in non-operating income from our investments in Anthropic." That single line is more than half of Amazon's pre-tax profit for the quarter. Amazon also said the markup was triggered by Anthropic's Series G round and the conversion of some of its convertible notes into preferred stock — accounting events, not customers paying bills.
Paper gains, real headlines
The gains are unrealized. Neither company has sold any Anthropic shares; they have simply re-marked the asset to a higher private valuation. Amazon has previously said its roughly $8 billion in Anthropic investments is now worth more than $70 billion on its books. The closer Anthropic gets to its rumored $900 billion round, the larger those paper gains grow.
What makes the loop unusual is that both Alphabet and Amazon are also Anthropic's largest cloud and chip suppliers. Google committed up to $40 billion in cash and compute to Anthropic in April, and Amazon agreed to invest up to $25 billion alongside a roughly $100 billion AWS commitment from Anthropic. Money flows in as compute spend and investment; Anthropic's valuation rises; the investors then book that rising valuation as profit on their own income statements.
Why investors should care
None of this is illegal or even unusual under GAAP — fair-value accounting for equity securities has been standard since 2018. But it does change how to read the headlines. "Google Cloud's AI business is on fire" is true; Google Cloud grew 63% in the quarter. "Half of Alphabet's record profit came from AI" is also true, but most of that half is a mark-to-market entry tied to one private company's funding round.
For anyone trying to gauge how much of the AI capex boom is paying for itself, the Fortune reading is a useful corrective. Strip out the Anthropic markup and Q1 2026 still looks strong — but it looks much more like a normal cloud-and-ads quarter than a generational profit windfall. With Anthropic's next round potentially valuing it near or above $900 billion, the paper gains are likely to keep growing. So is the dependence of two of the world's most valuable companies on the marked value of a single private AI lab.
