![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2026\/04\/GettyImages-2005640497-e1777565427220.jpg?w=2048\")
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Four of the largest U.S. tech companies reported earnings Wednesday afternoon, confirming an AI capital expenditure buildout without modern precedent.\u00a0<\/p>\n
Combined, they spent $130.65 billion on capital expenditures in the first three months of 2026\u2014more than three times the inflation-adjusted cost of the Manhattan Project, in a single quarter. They plan to spend nearly $700 billion this year alone, as much as the U.S. government spends on Medicare.\u00a0<\/p>\n
The headline profits suggest that the bet is paying off; Google parent Alphabet\u2019s profit jumped 81% to $62.6 billion last quarter, while Amazon\u2019s net income surged 77% to $30.3 billion and AWS revenue grew 28%.<\/p>\n
Yet a footnote in Google\u2019s earnings release, and a bullet point under the net-income section of Amazon\u2019s, tells a different story about where those profits came from. Nearly half of Alphabet\u2019s record $62.6 billion profit\u2014about $28.7 billion\u2014\u201ddid not come from search ads, cloud services or any of its products at all. It came from Alphabet updating the value of the equity it owns in private companies, primarily Anthropic, the AI startup in which Alphabet holds a stake estimated at 14% before the announcement of\u00a0 an additional $40 billion commitment last week.<\/p>\n
Amazon disclosed a similar figure even more directly. Its earnings release stated that first-quarter net income \u201cincludes pre-tax gains of $16.8 billion included in non-operating income from our investments in Anthropic\u201d\u2014more than half of Amazon\u2019s pre-tax income (or profit) for the quarter.\u00a0<\/p>\n
Amazon, in response to questions from Fortune, said the markup was triggered by Anthropic\u2019s Series G funding round and the conversion of some of Amazon\u2019s convertible notes into preferred stock. The company\u2019s $8 billion investment in Anthropic is now worth more than $70 billion, according to Amazon. They added that Amazon\u2019s investment in Anthropic is separate from its commercial relationship. <\/p>\n
Alphabet did not immediately respond to Fortune\u2019s<\/em> request for comment.\u00a0<\/p>\n Robert Willens, a tax and accounting consultant who has served as an adjunct at Columbia Business School, told Fortune<\/em> the accounting itself is uncontroversial. Companies that hold equity stakes in private firms are required to update those stakes\u2019 value when a new funding round sets a price.<\/p>\n What\u2019s different, Willens said, is what\u2019s actually driving the markup. When you own stock in a public company like Apple, the value comes from the open market; millions of institutional and retail buyers and sellers. With Anthropic, the value comes from whatever a small group of investors agreed to pay in the last funding round.<\/p>\n Alphabet and Amazon are two of those investors. When they put more money into Anthropic, or commit to spending billions on cloud capacity for it, that helps push Anthropic\u2019s valuation up. And when Anthropic\u2019s valuation goes up, the stake Alphabet and Amazon already own goes up with it. They book that increase as profit; in this case, a substantial cut of their profits, even more than half.\u00a0<\/p>\n In plain English, the more they invest in Anthropic, the more profit they can report\u2014without Anthropic ever having to pay them a dollar.<\/p>\n \u201cIt\u2019s interesting that they\u2019re able to control or influence the value of one of their own assets,\u201d Willens said, \u201cand one that they\u2019re able to mark to market by engaging in business transactions with that entity. There might be something to say about that.\u201d<\/p>\n This is not the first quarter Big Tech profits have been substantially shaped by markups on private AI investments. In Q1 2025, Alphabet booked an $8 billion unrealized gain that drew eyebrows until it was attributed by Bloomberg reporting to SpaceX. In Q3 2025, the figure rose to $10.7 billion. Plus Amazon has disclosed Anthropic-specific gains every quarter it\u2019s held the stake.<\/p>\n \u00a0What makes this quarter so striking is the scale: Alphabet\u2019s $36.9 billion equity gain is more than triple the prior peak of the number, and Anthropic\u2019s reported talks at a $900 billion valuation suggest the next markup could be larger still.<\/p>\n Willens also recalled that when accounting regulators required companies to start counting these unrealized gains as profit in 2018, \u201ceveryone said it would make earnings unnecessarily volatile\u201d\u2014that investors would struggle to make sense of profit figures jumping around while the underlying business stayed steady. \u201cThis, I suppose, confirms the fact that perhaps this wasn\u2019t the best idea [Financial Accounting Standards Board] ever came up with.\u201d<\/p>\n Editor\u2019s note<\/em>: This article was updated to clarify that Amazon disclosed Anthopic\u2019s role in its net income in a footnote in its SEC filing, but also on the front page of its earnings.<\/p>\n<\/div>\n #Googles #Amazons #blowout #profits #Anthropicnot #core #business<\/p>\n","protected":false},"excerpt":{"rendered":" Four of the largest U.S. tech companies reported earnings Wednesday afternoon, confirming an AI capital expenditure buildout without modern precedent.\u00a0 Combined, they spent $130.65 billion on capital expenditures in the… <\/p>\n","protected":false},"author":1,"featured_media":1786,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[310,3230,536,3232,3231,3228,283,397,744,1274,22,2400,166,609,91,1333,3229],"class_list":["post-1785","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-news","tag-amazon","tag-amazons","tag-anthropic","tag-anthropicnot","tag-blowout","tag-bubbles","tag-business","tag-core","tag-google","tag-googles","tag-investment","tag-ipos","tag-markets","tag-profits","tag-stock","tag-tech-stocks","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts\/1785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1785"}],"version-history":[{"count":0,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts\/1785\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/media\/1786"}],"wp:attachment":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}