Google showed a net profit of $62.6 billion in the first quarter (+81% y/y). However, $36.9 billion of this amount consists of unrealized revaluations of stakes in private companies, most notably SpaceX and Anthropic.

How stakes in SpaceX and Anthropic affect profit

Google owns 6.1% of SpaceX ($1 billion in 2015). At a valuation of $2 trillion, the stake is currently worth about $122 billion. And also 14% in Anthropic (cap 15%, up to $40 billion investment). Anthropic is currently valued at US$380 billion; According to Bloomberg, a round is being prepared that could raise the valuation to US$900 billion.

🛒Amazonditto: +$16.8 billion in unrealized gains from Anthropic in Q1.

Indirect exposure to private AI companies

It turns out that by owning GOOGL (and partially AMZN), an investor receives indirect exposure to two top private AI giants.

What investors should consider

🔘This is paper profit, and to turn it into cash, you need to sell it, which Google has no plans to do.
🔘Together, the shares add only a few percent to Google’s capitalization, since the bulk of the profit comes from advertising and cloud businesses.
🔘Although after the IPO, reports may become more volatile, since Anthropic and SpaceX quotes will distort net income each quarter.

Why these investments are strategically important

📌Strategically, these shares are even more valuable than cash. Anthropic is a major customer of Google’s TPU processors, and SpaceX is preparing orbital data centers.