Combined, they spent $130.65 billion on capital expenditures in the first three months of 2026—more than three times the inflation-adjusted cost of the Manhattan Project, in a single quarter. They plan to spend nearly $700 billion this year alone, as much as the U.S. government spends on Medicare. 

The headline profits suggest that the bet is paying off; Google parent Alphabet’s profit jumped 81% to $62.6 billion last quarter, while Amazon’s net income surged 77% to $30.3 billion and AWS revenue grew 28%.

Yet a footnote in Google’s earnings release, and a bullet point under the net-income section of Amazon’s, tells a different story about where those profits came from. Nearly half of Alphabet’s record $62.6 billion profit—about $28.7 billion—”did not come from search ads, cloud services or any of its products at all. It came from Alphabet updating the value of the equity it owns in private companies, primarily Anthropic, the AI startup in which Alphabet holds a stake estimated at 14% before the announcement of  an additional $40 billion commitment last week.

Amazon disclosed a similar figure even more directly. Its earnings release stated that first-quarter net income “includes pre-tax gains of $16.8 billion included in non-operating income from our investments in Anthropic”—more than half of Amazon’s pre-tax income (or profit) for the quarter. 

Amazon, in response to questions from Fortune, said the markup was triggered by Anthropic’s Series G funding round and the conversion of some of Amazon’s convertible notes into preferred stock. The company’s $8 billion investment in Anthropic is now worth more than $70 billion, according to Amazon. They added that Amazon’s investment in Anthropic is separate from its commercial relationship.

Alphabet did not immediately respond to Fortune’s request for comment. 

Robert Willens, a tax and accounting consultant who has served as an adjunct at Columbia Business School, told Fortune the accounting itself is uncontroversial. Companies that hold equity stakes in private firms are required to update those stakes’ value when a new funding round sets a price.

What’s different, Willens said, is what’s actually driving the markup. When you own stock in a public company like Apple, the value comes from the open market; millions of institutional and retail buyers and sellers. With Anthropic, the value comes from whatever a small group of investors agreed to pay in the last funding round.

Alphabet and Amazon are two of those investors. When they put more money into Anthropic, or commit to spending billions on cloud capacity for it, that helps push Anthropic’s valuation up. And when Anthropic’s valuation goes up, the stake Alphabet and Amazon already own goes up with it. They book that increase as profit; in this case, a substantial cut of their profits, even more than half. 

In plain English, the more they invest in Anthropic, the more profit they can report—without Anthropic ever having to pay them a dollar.

“It’s interesting that they’re able to control or influence the value of one of their own assets,” Willens said, “and one that they’re able to mark to market by engaging in business transactions with that entity. There might be something to say about that.”

This is not the first quarter Big Tech profits have been substantially shaped by markups on private AI investments. In Q1 2025, Alphabet booked an $8 billion unrealized gain that drew eyebrows until it was attributed by Bloomberg reporting to SpaceX. In Q3 2025, the figure rose to $10.7 billion. Plus Amazon has disclosed Anthropic-specific gains every quarter it’s held the stake.

 What makes this quarter so striking is the scale: Alphabet’s $36.9 billion equity gain is more than triple the prior peak of the number, and Anthropic’s reported talks at a $900 billion valuation suggest the next markup could be larger still.

Willens also recalled that when accounting regulators required companies to start counting these unrealized gains as profit in 2018, “everyone said it would make earnings unnecessarily volatile”—that investors would struggle to make sense of profit figures jumping around while the underlying business stayed steady. “This, I suppose, confirms the fact that perhaps this wasn’t the best idea [Financial Accounting Standards Board] ever came up with.”

Editor’s note: This article was updated to clarify that Amazon disclosed Anthopic’s role in its net income in a footnote in its SEC filing, but also on the front page of its earnings.