Imagine making nearly $100 billion in a single quarter and dedicating exactly one vague sentence to explain it. That’s essentially what Google parent Alphabet did in its second quarter earnings report, casually noting that its “other income” totaled $98 billion thanks to unrealized gains on its investments. Analysts barely batted an eye — none of them even bothered asking about the windfall on the company’s earnings call, choosing instead to press executives about capital expenditures and Google’s position in the increasingly competitive AI race. The stock closed down about 1.24 percent.
This isn’t the first time Alphabet has quietly slipped a massive paper gain into its financials. In April, the company disclosed a similar $8 billion gain using the same terse language. Google has no obligation to reveal exactly where these profits originate, and it hasn’t. But the gains almost certainly stem from a remarkably shrewd investment portfolio that includes stakes in SpaceX, Anthropic, and Databricks — three of the most valuable private companies in the world right now.
Google’s timing with these investments looks almost prescient in hindsight. The company bought roughly 7 percent of SpaceX back in 2015 when the rocket maker was worth about $12 billion. SpaceX went public last month at a valuation of around $1.5 trillion, which would represent a staggering 133-fold return for Google. The search giant also holds approximately 14 percent of Anthropic, the AI lab that was valued at nearly $1 trillion during a massive funding round in May and may already be worth closer to $1.2 trillion according to some investors. Databricks, another Alphabet bet, was valued at $188 billion earlier this month.
Impressive as those returns are, investors seem far more preoccupied with whether Google can hold its own ground. The company has hiked its capital expenditure ceiling to as much as $205 billion this year as it scrambles to stay competitive in AI, and while its distribution power and custom chipmaking give it real advantages, efforts to build a leading AI model have yet to fully pay off. Google keeps delaying its next major chatbot release, drawing mockery from rivals online. Still, plenty of analysts remain bullish on the fundamentals — revenue jumped nearly 25 percent year over year driven by strong advertising and cloud sales, both of which are getting a boost from artificial intelligence. As Emarketer principal analyst Nate Elliott put it, simply enough, it was another impressive quarter for Google.