GoKawiilIndia Prime Minister Narendra Modi, left, with OpenAI CEO Sam Altman, center, and Anthropic CEO Dario Amodei at the AI Impact Summit in New Delhi on Feb. 19, 2026.
Tech companies' venture capital portfolios are making corporate profits look a lot stronger than they really are.
Microsoft , Amazon and Alphabet booked sizable investment gains in the most recent quarter thanks to stakes in Anthropic and OpenAI, and in one case, SpaceX.
Anthropic and OpenAI have both seen soaring valuations in private markets, with both valued just south of $1 trillion amid the ongoing AI boom. Microsoft and Amazon are private shareholders in those companies, while Google has a stake in Anthropic. As a result, they need to account for an increase in the value of their stakes in quarterly income statements. But that doesn't reflect profits generated by selling software, or other services.
These gains in private investments across a handful of companies has already had an outsized impact on overall earnings growth, according to LSEG.
Earnings growth for the S&P 500 in the most recent quarter is up around 48% from a year ago, according to LSEG's head of earnings and equity research Tajinder Dhillon. When adjusting to pull out out those investment gains from private AI companies, Dhillon points out that the growth is much more muted.
Without those gains from just Alphabet and Amazon's private company stakes, aggregate earnings growth would be sitting around 29%, according to Dhillon. That's much closer to what analysts had been forecasting. The consensus for the quarter was 24% growth.
"The headline earnings numbers were very much inflated by equity gains in OpenAI, Anthropic and SpaceX," Gil Luria, managing director and head of technology research at D.A. Davidson, told CNBC. "Having said that, these types of moves tend to even out over time, which is why we typically exclude them from a non-GAAP view and from forecasts."
Most analysts are excluding these one-time items in their estimates. But in the near term, it resulted in more earnings upside surprises. Companies this quarter have reported earnings 7% above expectations, according to LSEG. That compares to a long-term average of 4.4% above consensus.