India Prime Minister Narendra Modi, left, with OpenAI CEO Sam Altman, center, and Anthropic CEO Dario Amodei at the AI Impact Summit in New Delhi on Feb. 19, 2026.
Ludovic Marin | Afp | Getty Images
Tech companies’ venture capital portfolios are making corporate profits look a lot stronger than they really are.
Microsoft, Amazon and Alphabet booked sizable investment gains in the most recent quarter thanks to stakes in Anthropic and OpenAI, and in one case, SpaceX.
Anthropic and OpenAI have both seen soaring valuations in private markets, with each valued just south of $1 trillion amid the ongoing AI boom. Microsoft and Amazon are private shareholders in those companies, while Google has a stake in Anthropic. As a result, they need to account for an increase in the value of their stakes in quarterly income statements. But that doesn’t reflect profits generated by selling software, or other services.
These gains in private investments across a handful of companies has already had an outsized impact on overall earnings growth, according to LSEG.
Earnings growth for the S&P 500 in the most recent quarter is up around 48% from a year ago, according to Tajinder Dhillon, LSEG’s head of earnings and equity research. When adjusting by pulling out those investment gains from private AI companies, Dhillon points out, the growth is much more muted.
Without those gains from just Alphabet and Amazon’s private company stakes, aggregate earnings growth would be sitting around 29%, according to Dhillon. That’s much closer to what analysts had been forecasting. The consensus for the quarter was 24% growth.
“The headline earnings numbers were very much inflated by equity gains in OpenAI, Anthropic and SpaceX,” Gil Luria, managing director and head of technology research at D.A. Davidson, told CNBC. “Having said that, these types of moves tend to even out over time, which is why we typically exclude them from a non-GAAP view and from forecasts.”
Most analysts are excluding these one-time items in their estimates. But in the near term, it resulted in more earnings upside surprises. Companies this quarter have reported earnings 7% above expectations, according to LSEG. That compares with a long-term average of 4.4% above consensus.
The earnings dynamic matters even more because of the influence of mega-cap tech stocks, which already have an outsized weighting in the market. The so-called Magnificent Seven names accounted for about 35% of S&P 500 second-quarter revenue, according to LSEG. This group of tech stocks in the past year or so has represented about a third of the overall large-cap index.
These investment gains tend to be lumped into “other income,” so there’s a wide range of how these are reported between the tech companies.
Amazon is a major backer of OpenAI, and it committed $50 billion in the ChatGPT maker in late February. It was also an early investor in Anthropic. Amazon saw a more than 240% jump in earnings from a year ago. But without those investment gains, it was closer to 17%. In the quarter, it notched a $53.4 billion gain “primarily from” its investment in Anthropic.
Alphabet saw a similar dynamic, mostly thanks to SpaceX. The Google parent company has a roughly 5% stake in Elon Musk’s rocket company. Alphabet’s bottom-line growth surged nearly 300%. Without the gain from SpaceX and Anthropic, the jump would be closer to 23%.
For Microsoft, the impact was a bit more muted. It still saw about 10 percentage points added to earnings growth thanks to an investment gain in Anthropic, and a net income gain of $3.2 billion that it said was mostly from Anthropic. Microsoft reported a $480 million gain in its OpenAI stake.
The dynamic underlines just how intertwined these AI companies are with Big Tech. Even before they hit public markets themselves. Anthropic and OpenAI have both filed with the SEC confidentially and are expected to list within the next year.
Luria pointed out that this earnings dynamic may balance out with more volatility. And it works both ways. SpaceX, for example, is down roughly 50% from its high after its initial public offering.
“Specifically, based on where SpaceX is trading now, GOOGL will likely have a big reversal in their mark-to-market when they report the September quarter,” he said. “A successful Anthropic IPO in September could offset that, but it is too early to tell.”
Others see the underlying earnings growth as healthy, even with the bump from Big Tech. Jeff Kilburg, founder and CEO of KKM Financial, called the “enormous” profits from tech giants “sprinkles” on top of an already strong earnings season. Kilburg called the jump in corporate earnings “jaw dropping,” even without the inclusion of private assets.
— CNBC’s Robert Hum contributed reporting.
