Anthropic, OpenAI stakes distort Big Tech earnings picture

Financial Performance and Earnings Distortion - S&P 500 year-over-year earnings growth approached 50% [2] - S&P earnings growth dropped to approximately 29% after stripping out mark-to-market investment gains, aligning closer to the analyst consensus of 24% [3] - Amazon recorded about 240% year-over-year earnings growth, which reduced to nearly 17% after excluding AI portfolio gains, amounting to a round number gain of 53 billion dollars [4] - Alphabet experienced roughly 300% earnings growth, which adjusted closer to 23% without mark-to-market gains [4] - Alphabet reported equity securities gains of 99 billion dollars, compared to nearly 1 billion dollars from the previous year [5] - Microsoft experienced a more muted impact, receiving about a 10 percentage point boost from its portfolio [6] Industry Trends and Venture Capital Impact - Massive recent quarter earnings growth across Amazon, Microsoft, and Alphabet was primarily driven by venture capital portfolios rather than underlying businesses [1] - Tech giants hold significant stakes in OpenAI and Anthropic, with Amazon backing OpenAI early and investing in Anthropic, and Microsoft showing deep ties to the AI ecosystem [1][4][6] - Alphabet benefited significantly from a roughly 5% stake in SpaceX, which heavily impacted quarterly income statements [2][5] - Investment gains are categorized under other income, resulting in varying degrees of financial transparency across technology companies [3]