The valuation of Anthropic shares held by Google (GOOGL.US) soared to US$124 billion, boosting second-quarter profit breaking the 100 billion mark for the first time

The Zhitong Finance App learned that Google's parent company Alphabet (GOOGL.US)'s bet on artificial intelligence (AI) star startup Anthropic is shaking Wall Street with unprecedented book returns. According to regulatory documents, the value of Alphabet's Anthropic shares has soared to around US$124 billion, making it one of the most rewarding investments in the company's history and directly driving its second-quarter net profit to surpass $100 billion for the first time.

Alphabet disclosed in quarterly filings submitted on Thursday that as of June 30, the total value of its investments in unnamed private companies was approximately US$124.3 billion. A source familiar with the matter revealed that this astronomical figure was “mostly” driven by a single investment in Anthropic. The documents also showed that Alphabet recorded unrealized revenue of about $77 billion from private investment in the second quarter, but no further details were disclosed.

This huge book wealth stems from Google's continued expansion of Anthropic's layout. Starting in 2023, the tech giant began injecting an initial capital of $3 billion into Anthropic. Earlier this year, Google also agreed to an additional investment of up to 40 billion US dollars, including an initial capital injection of 10 billion US dollars, and follow-up funding of up to 30 billion US dollars until 2030, depending on how operational and financial milestones are reached.

Thursday's documents further showed that the remaining amount of this additional commitment had dropped from US$30 billion at the end of the first quarter to US$20 billion at the end of the second quarter, implying that Google invested another $10 billion in Anthropic in the past quarter.

Currently, Anthropic has rapidly emerged as OpenAI's main rival in the field of developing cutting-edge AI models, attracting competitive bets from giants such as Google and Amazon (AMZN.US). The company is preparing for its highly anticipated initial public offering, following reports that it could go public as early as October this year. During the second quarter, Anthropic's private equity market valuation swelled sharply from $350 billion to $965 billion, which brought huge paper returns to Alphabet's portfolio.

This investment also resulted in the most profitable quarter in Alphabet's history.

The company's results announced after the US stock market on Wednesday showed that net profit for the second quarter soared 298% year over year to an astonishing 112.1 billion US dollars, reaching 12 digits for the first time. Revenue for the quarter increased 24% to US$119.8 billion, with Google Cloud's business growing at an 82% rate. CEO Sundar Pichai said this proved that the company's “full-stack AI strategy is bringing real and measurable value.”

However, it is “other income” outside of the main business that actually pushes profits to the peak of history. According to notes to the financial report, Alphabet recorded equity investment income of about 99 billion US dollars, including realized and unrealized income, during the quarter, contributing about 77.1 billion US dollars to net profit after tax, accounting for 6.26 US dollars of 9.11 US dollars per share. This windfall mainly comes from investments in the AI sector, particularly Anthropic, and Alphabet's space exploration company SpaceX (SPCX.US), where Alphabet holds about 6% of its shares. SpaceX went public in early June, and its valuation reached 1.77 trillion US dollars, far higher than the 400 billion US dollar valuation a year ago when it was a private company, and also unleashed huge profits.

Behind this impressive profit, a mutually reinforcing circular network is also hidden, triggering the market to scrutinize its sustainability. Alphabet's capital boosted Anthropic's valuation; at the same time, Anthropic promised to buy at least five gigawatts of computing power from Google Cloud — roughly equivalent to the power generation of five nuclear reactors, enough to meet the electricity needs of around 4 million households. This spending directly poured into Google's cloud business, fueling Wall Street's high-profile 82% cloud growth. Funds flow within the same ecosystem: Google invests in Anthropic, Anthropic pays Google for computing power, Anthropic's valuation rises, and Google then counts the rise in valuation as profit.

Tax and accounting consultant Robert Willens once commented: “It's interesting that they can control or influence the value of one of their assets.” As early as April of this year, a smaller Anthropic valuation increase contributed nearly half of Alphabet's first-quarter profits. At the time, this phenomenon already attracted attention.

Despite record performance figures, investors' reactions were relatively calm. As Alphabet raised its 2026 planned capital expenditure to the range of 1950 billion to 205 billion US dollars, higher than the previous estimate of 180 billion to 190 billion US dollars, and facing increasingly fierce competition for its Gemini series AI models, the company's stock price closed down more than 7% on Thursday.