AI Investment Gains Inflate Big Tech Quarterly Earnings

Investment gains from private AI and aerospace firms significantly inflated the quarterly earnings of Amazon.com, Alphabet Inc., and Microsoft. These mark-to-market adjustments pushed S&P 500 earnings growth to approximately 48% year-over-year, though the figure would decline to roughly 29% if gains from Alphabet and Amazon were excluded.

Amazon recorded a $53.4 billion gain primarily linked to its investment in Anthropic. Alphabet's bottom-line growth surged nearly 300%, fueled by stakes in Anthropic and Space Exploration Technologies Corp. Microsoft reported a $3.2 billion net income gain mostly from Anthropic and an additional $480 million gain from OpenAI.

Analysts suggest these one-time items create an artificial upside in headline numbers. However, some maintain that underlying corporate earnings growth remains strong independently of these private asset valuations.