Google $62.6B Profit Jumps 81%, But Half Came From Anthropic Paper Gains

Alphabet’s latest Google earnings showed a sharp jump in profit. But the details behind this rise tell a different story. The company reported net income of $62.6 billion for the quarter. This is up 81% from a year earlier. At first, it shows strong momentum across its business. But a closer look shows that a major portion of this increase came from gains on investments, not from its core operations.

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$36.9B From Marking Up SpaceX and Anthropic Stakes, Not Actual Business

Revenue rose to $109.9 billion, beating estimates of about $107.2 billion. Google Cloud continued to stand out. It grew 63% year over year to $20 billion. This was supported by demand for AI infrastructure and enterprise tools.

Despite this growth, the biggest contributor to Alphabet’s profit this quarter was a $36.9 billion gain tied to equity investments. These include stakes in companies like Anthropic and SpaceX. The gains came from marking up the value of those holdings after new funding rounds. This was not from selling products or services.

It further means that abut 59% of Alphabet’s total profit was driven by these paper gains.

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Anthropic Valuation Driving the Surge

Anthropic’s rising valuation played a major role. The AI company is reportedly in talks at levels approaching $900 billion. As this valuation increases, so does the reported value of Alphabet’s stake. Robert Willens, a tax and accounting consultant, said,

“It’s interesting that they’re able to control or influence the value of one of their own assets and one that they’re able to mark to market by engaging in business transactions with that entity. There might be something to say about that.”

This type of accounting is standard. Companies are required to adjust the value of their investments when new funding rounds set updated prices. But it can make earnings appear higher even when business performance is more moderate.

Excluding these gains, adjusted earnings per share came in at $2.76, compared to the reported $5.11. Yet, investors responded positively. Alphabet shares rose about 10% on the day following the results. The company’s market cap reached $4.4 trillion.

It should be noted that big tech firms are increasing their spending on AI at a rapid pace. The rising Anthropic valuation levels are feeding into financial results across the sector.

For now, Alphabet’s core business remains strong, mostly in the cloud. But this quarter also shows how much of the current growth narrative is tied to investment gains and expectations around AI. This raises the ongoing questions about how sustainable this AI bubble narrative really is.

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