Big Tech AI stakes boost S&P earnings growth to 48% YoY

Big Tech’s equity gains from private AI firms lifted S&P 500 earnings growth to about 48% year‑over‑year in the latest quarter, far above analysts’ 24% forecast [1].

AI stakes drive headline earnings

Microsoft, Amazon and Alphabet each booked sizable gains from their stakes in Anthropic, OpenAI and SpaceX, which are recorded as “other income.” Microsoft’s $3.2 bn gain from Anthropic added $0.33 to diluted EPS, while a $600 m write‑down on its OpenAI stake trimmed EPS by 7 cents [3]. Amazon’s quarterly earnings jumped more than 240% YoY, but without the $53.4 bn Anthropic gain the increase would have been around 17% [1]. Alphabet’s bottom‑line surged nearly 300% YoY, yet stripping out SpaceX and Anthropic gains would leave growth near 23% [1].

These one‑off equity revaluations inflated the S&P’s earnings growth to 48% YoY, compared with the consensus 24% forecast. When the AI‑related gains are removed, growth falls to roughly 29% YoY, aligning closely with analyst expectations [1]. The effect is amplified by the “Magnificent Seven” mega‑caps, which represent about 35% of S&P 500 revenue and roughly a third of the index’s overall weight [1].

Market implications and rival dynamics

The distortion highlights how intertwined Big Tech and private AI startups have become before any IPOs. Anthropic and OpenAI, each valued just under $1 trn, remain private, yet their valuation swings directly affect the earnings of their corporate backers [1]. Analysts typically exclude such non‑operating items from forecasts, but the current surge created earnings surprises of 7% above expectations, versus a long‑term average of 4.4% [1].

Alphabet’s exposure to SpaceX adds another layer of volatility; a 50% drop in SpaceX’s post‑IPO price could trigger a sizeable reversal for Google’s earnings in the September quarter [1]. Conversely, a successful Anthropic IPO later this year could offset that hit, though timing remains uncertain [1].

What to watch

• Anthropic IPO timing – slated for September; market reaction will affect the earnings of Microsoft, Amazon and Alphabet.
• SpaceX stock performance – a 50% decline from its IPO high could force a reversal in Alphabet’s earnings in the next reporting period.
• Next S&P earnings season – analysts will likely continue stripping AI equity gains to gauge underlying profitability.

The headline earnings boost underscores the growing influence of private AI valuations on public market metrics, raising questions about how sustainable the apparent growth is once these non‑operating gains are removed.