Source: Fortune
Summary
Alphabet, the parent company of Google, reported a record quarterly profit of $112.1 billion, a 298% year-over-year increase. The company’s Q2 revenue grew 24% to $119.8 billion, with Google Cloud reaching 82% growth. However, $99 billion of the profit came from “unrealized and realized” gains on equity securities in Alphabet’s investment portfolio, primarily from AI investments in Anthropic and SpaceX. The investments’ valuations soared in Q2, with SpaceX going public at a $1.77 trillion valuation and Anthropic’s private-market valuation jumping to $965 billion.
Our Reading
The numbers tell one story.
Alphabet’s Q2 profit was largely driven by investments in Anthropic and SpaceX, which saw significant valuation increases. The company’s “full stack approach to AI” delivered “real, measurable value,” according to CEO Sundar Pichai. Despite the record results, shares of Google fell 3% in after-hours trading due to concerns over rising capital expenditures and competition in the AI market. Alphabet’s investment portfolio and Google Cloud growth are closely tied, with Anthropic committing to purchase computing capacity from Google Cloud.
It’s a circular relationship that reinforces itself: Alphabet invests in Anthropic, Anthropic spends billions on Google Cloud, and Alphabet books the valuation increase as earnings. The same dollars go in a loop.
Author: Evan Null
