Big Tech profits get $160bn boost from gains on stakes in other AI companies

By Gammatek ISPL , Industrial Systems & Compliance Analyst at Gammatek ISPL Published: August 2026 | 11 min read

Author block: Gammatek ISPL covers technology and vendor-risk trends relevant to industrial buyers at Gammatek ISPL, drawing on the company's work advising manufacturing, chemical, and pharmaceutical clients on software and compliance decisions. Figures in this article are sourced from company earnings filings, CNBC, and LSEG (London Stock Exchange Group) analysis, current as of August 2026.

Why This Matters

Alphabet, Amazon, Microsoft, and Nvidia collectively added more than $160 billion to their reported profits last quarter — and almost none of it came from selling ads, cloud computing, or chips. It came from the rising paper value of their stakes in private AI companies like OpenAI, Anthropic, and SpaceX. That single accounting line is now large enough to distort how strong the broader economy actually looks: strip it out, and S&P 500 earnings growth drops from a blockbuster 48% to a far more ordinary 29%. If you rely on "Big Tech is booming" as a signal for where technology spending, hiring, or vendor stability is headed, it's worth understanding that a meaningful chunk of that boom currently exists only on paper.

The mechanism turning private AI valuations into public company profit, without a single share being sold.

The Numbers, Plainly

According to LSEG analysis reported by CNBC, Alphabet, Amazon, Nvidia, and Microsoft collectively booked over $160 billion in unrealized gains in the second quarter of 2026 — more than double the roughly $69 billion recorded the prior quarter. Alphabet alone reported close to $98 billion in "other income" for the quarter ending June 30, 2026, driving a near-300% jump in earnings per share. Amazon's other income reportedly reached over $53 billion, more than tripling the previous quarter's figure. Microsoft recognized a $3.2 billion gain tied to its Anthropic stake, partially offset by a decline in the value of its OpenAI holding.

Company	Reported "Other Income" / Investment Gains (Q2 2026)	Primary Source of Gain
Alphabet	~$98 billion	Rising valuations of AI-sector holdings
Amazon	~$53 billion	Private company stake appreciation
Microsoft	$3.2 billion (net)	Anthropic stake gain, partly offset by OpenAI stake decline
Nvidia	Contributed to combined $160B+ total	AI-sector equity holdings

(Figures per company filings and LSEG/CNBC reporting as of August 2026 — verify against the most current quarterly filings before publishing, as these are subject to revision and change every reporting period.)

How a Paper Gain Becomes a Reported Profit

This isn't a case of these companies manipulating numbers — it's a straightforward, legal application of US accounting standards. When a company holds equity in another firm and that firm raises a new funding round at a higher valuation (or goes public at a premium), accounting rules require the investor to mark that stake up to its new estimated fair value — and record the increase as income, even though no cash has changed hands and no shares have been sold.

The mechanics create a feedback loop worth understanding: Big Tech companies invest capital into AI startups. Those startups often spend a large share of that capital on cloud infrastructure and chips — purchased from the very companies that invested in them. As the startups' valuations climb (partly fueled by that spending pattern and by follow-on investor enthusiasm), the original investors get to book the markup as profit, which supports their own stock price and gives them more capital to deploy into the next funding round.

Gil Luria, managing director and head of technology research at D.A. Davidson, told CNBC that this quarter's headline earnings were substantially inflated by equity gains tied to OpenAI, Anthropic, and SpaceX specifically. Tajinder Dhillon, LSEG's head of earnings and equity research, found that excluding just Alphabet and Amazon's private-company gains, aggregate S&P 500 earnings growth falls from 48% to about 29% — much closer to the 24% analysts had originally forecast for the quarter.

Why "Paper Wealth" Is a Meaningfully Different Thing Than Cash Profit

These gains are real under current accounting rules, but they're not liquid. If a private AI company's valuation falls in a future round — which has happened before during past tech cycles — these same companies could be required to record matching losses, reversing the exact earnings boost investors are currently cheering. Microsoft's own results this quarter are a small preview of that risk: its Anthropic gain was partly offset by a decline in its OpenAI stake value in the same reporting period.

This is the part general tech coverage of this story often glosses over: when a public company's headline profit depends heavily on the valuation of a handful of private companies it doesn't control, the company's own reported "growth" becomes a proxy for sentiment in a market (private AI valuations) that is opaque, concentrated, and historically volatile.

An Implementation Consideration for Industrial Technology Buyers

Here's where this story reaches beyond Wall Street. Manufacturing, chemical, and pharma plants increasingly rely on cloud infrastructure, AI-driven monitoring tools, and software vendors whose own financial health is now partly tied to this exact dynamic. A vendor whose reported profitability leans heavily on unrealized AI-stake gains — rather than recurring product revenue — carries a different risk profile than one whose earnings come primarily from selling and supporting its actual product.

This matters concretely during vendor due diligence: if you're evaluating a software or infrastructure partner for a multi-year deployment, it's worth asking not just "is this company profitable," but "where does that profitability actually come from, and how much of it would evaporate if AI valuations cooled." That question applies to Big Tech cloud providers your plant may already depend on, and it's a useful lens for evaluating any vendor whose pitch leans heavily on AI hype rather than demonstrated operational reliability.

At Gammatek, this is part of why our own platform emphasizes transparent, auditable vendor and compliance documentation — the same due-diligence discipline we help clients apply to their equipment and safety vendors is worth applying to software vendors too, especially in a market this concentrated.

[Learn how Gammatek helps plants evaluate and document vendor risk as part of compliance readiness →https://www.gammateksolutions.com/post/ai-hasn-t-gone-rough-its-worst-than-that

The Bigger Picture

Analysts aren't calling this a bubble outright, but the concentration is notable: a small handful of AI companies — OpenAI, Anthropic, and SpaceX chief among them — are now influential enough to swing reported earnings across some of the world's largest public companies by tens of billions of dollars in a single quarter. Whether that proves to be durable value creation or a temporary distortion will likely become clearer over the next few reporting cycles, as these valuations either continue climbing or face their first real test.

For now, the practical takeaway for anyone outside the world of equity analysis is simple: when you read that Big Tech earnings are booming, it's worth checking how much of that boom is coming from the actual business — and how much is coming from the rising price tag on companies they simply own a piece of.