Alphabet profit jumps as Anthropic stake adds $28.7B
Anthropic has committed to spend $200 billion with Google Cloud over five years — but neither company will confirm the number. Reuters reported the figure on May 5, citing The Information, but could not immediately verify it. Anthropic declined to comment. Google redirected questions to Anthropic. The silence is the story.
When Alphabet published its first-quarter earnings on April 29, the headline numbers were strong: Google Cloud hit $20 billion in revenue for the first time, up 63 percent year-over-year, with a backlog of future contracts that nearly doubled to $462 billion. Alphabet chief executive Sundar Pichai told analysts the cloud business would be larger if the company could source enough computing power to meet demand. The company guided 2026 capital expenditures to as much as $190 billion, according to CNBC.
But the quarter also showed the cost of its deepest entanglement. Nearly half of the $62.6 billion in profit Alphabet reported for the first three months of 2026 — $28.7 billion — did not come from search ads, cloud contracts, or any product customers actually buy. It came from updating the value of an asset Alphabet already owned: its stake in Anthropic, the same company that just signed the largest cloud contract in Google's history, if the reported figure is accurate.
That is the circularity baked into the numbers. The gain is real. The backlog is real. The question is what the connection between them obscures — and whether the central number that anchors the whole structure can be verified at all.
Amazon disclosed a similar dynamic in the same period. Its first-quarter results included $16.8 billion in pre-tax gains from investments in Anthropic, a company that has committed more than $100 billion to Amazon Web Services technologies over the next decade, according to Anthropic's own announcement. Amazon's original $8 billion investment in Anthropic is now worth more than $70 billion, according to Fortune's analysis of the earnings disclosure. Amazon is at once Anthropic's largest cloud customer, its infrastructure counterparty, and the beneficiary of the largest single unrealized gain on its books.
Robert Willens, an accounting expert who has studied equity-method investments for decades, identified the structural tension directly in a Fortune interview: companies that hold stakes in entities they also do business with can, by virtue of those business relationships, influence the value of the asset they are required to mark to market. "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," Willens said.
The companies involved are not breaking any rules. Mark-to-market accounting for equity stakes is required and well-established. The question is what the numbers obscure. When a company books $28.7 billion in gains from a private-company stake in a single quarter, and that same private company is simultaneously signing the largest cloud contracts in the industry — a figure neither company will confirm — the gain is not independent of the relationship, according to Fortune's analysis of the earnings disclosures. Alphabet, Amazon, and Anthropic all declined to comment beyond their public disclosures.
For investors trying to assess Alphabet's AI-powered earnings, the breakdown matters. Operating earnings from Google's core advertising business grew solidly in the quarter. The equity-method gain represented roughly 46 percent of reported net income in the period — a figure derived from Alphabet's disclosed earnings and Fortune's breakdown of the gain's source. Without it, the year-over-year profit comparison looks materially different. Alphabet's capital expenditure in the quarter was $35.7 billion, much of it directed at the AI infrastructure buildout that Pichai said is the reason cloud demand outruns supply, according to CNBC.
The circular structure runs the other direction too. Alphabet holds approximately 14 percent of Anthropic before accounting for the additional $40 billion commitment it announced alongside the cloud deal, Fortune reported. As Anthropic's valuation climbs with each new compute commitment and revenue milestone, the mark-to-market gain climbs with it — feeding back into Alphabet's income statement, which in turn makes the investment look more productive, which supports higher valuations in the next financing round.
What Alphabet does not say in its earnings materials is what the backlog is worth if Anthropic's revenue growth slows, if a competitor closes the capability gap, or if the mark-to-market gains reverse when the next private-market valuation reset arrives. The cloud backlog is real. The gain is real. The connection between them is what makes the quarter worth looking at twice. And the central number — $200 billion — remains officially unconfirmed.
What to watch next: Alphabet's next quarterly filing will show whether the mark-to-market dynamic repeats. Separately, Amazon and Alphabet both have significant Anthropic-related equity positions that will appear in their upcoming 10-Q filings, where the exact stake percentages and carrying values will become legible to outside analysts for the first time since the most recent deal announcements. Whether either company will say how they arrived at the $200 billion figure — and what happens if the answer is that they can't — is a question neither was willing to answer.