Alphabet, Amazon, Nvidia, and Microsoft collectively recorded more than $160 billion in unrealized gains during the second quarter of 2026, driven entirely by rising valuations of their stakes in private AI companies. The total more than doubled from roughly $69 billion in the prior quarter.

Although the gains are classified as "other income" on financial statements and are technically real under current accounting rules, they represent paper wealth rather than cash. Because these gains sit outside core operations, analysts and investors have long treated "other income" as a line to strip out when assessing how the underlying advertising, cloud, and chip businesses are actually performing.

Where the money came from (on paper)

Alphabet led the group with $97.9 billion in other income for the quarter ending June 30, 2026. That total more than doubled from the previous quarter, fueled by surging valuations of companies it has backed in the AI space. Alphabet's stakes include its long-standing position in SpaceX, dating back to a 2015 investment alongside Fidelity.

Amazon's other income reached $53.4 billion, more than tripling the prior quarter's figure. Amazon's most valuable venture holding is widely reported to be its minority stake in Anthropic, the AI developer it has backed across multiple funding rounds.

The largest single driver appears to be SpaceX, which went public in June 2026 at a market valuation of $1.77 trillion. Nvidia alone held nearly 123 million shares in SpaceX as of June 30, meaning the IPO crystallized an enormous mark-to-market gain on its balance sheet.

Anthropic's valuation reportedly climbed to approximately $965 billion during the same period.

Accounting rules meet AI hype

Under current US accounting standards, companies holding equity stakes in other firms must recognize changes in fair value through their income statements. When a private company raises a new funding round at a higher valuation, or goes public at a premium, the investor books the difference as income.

As a result, headline earnings at these companies now include a significant component unrelated to selling cloud services, advertising, or chips. A quarter in which Alphabet reports nearly $98 billion in "other income" is a quarter in which traditional operating metrics are buried under a mountain of mark-to-market accounting.

The circular economy of AI valuations

Big Tech companies invest billions in AI startups. Those startups use the capital to buy cloud computing services and chips from Big Tech companies. The startups' valuations rise, boosting Big Tech's reported profits, which in turn supports higher stock prices that give these companies more capital to deploy into the next round of AI investments. This dynamic has drawn growing attention from regulators and accounting observers, who note that vendor-financing arrangements of this kind make reported AI demand harder to measure independently.

With both Anthropic and OpenAI anticipated to pursue public offerings, if Anthropic—valued at roughly $965 billion in private markets—were to go public and trade below that mark, every company holding its shares would need to write down the position. The same unrealized gains mechanism that inflated profits on the way up would deflate them on the way down.

The gap between the prior quarter's $69 billion in combined gains and this quarter's $160 billion-plus illustrates how sensitive these figures are to timing. A single IPO or funding round can swing reported profits by tens of billions of dollars. The pending public offerings of Anthropic and OpenAI are the clearest test cases ahead: their post-IPO trading levels will determine whether these paper gains hold or reverse.