alphabet made history on Wednesday with a quarterly profit that reached 12 figures for the first time in the search giant’s history – and perhaps the first time in any company’s history. Alphabet, Google’s parent company, increased its second-quarter profit by 298% year-over-year, posting net income of a staggering $112.1 billion.
That’s more profit in three months than 459 of them Fortune 500 companies generate sales in a full year.
What is there? Alphabet’s second-quarter revenue rose an impressive 24% to $119.8 billion, with its Google Cloud business hitting a record 82% growth rate – CEO Sundar Pichai called the results proof that the company’s “full-stack approach to AI is delivering real, measurable value.”
Well, that — plus $99 billion in additional (or “other”) revenue that isn’t directly generated by Alphabet’s day-to-day operations like search advertising and YouTube subscriptions.
A footnote in Alphabet’s second-quarter earnings release provides a little more insight into where those record-breaking profits came from. Alphabet booked $99 billion in “unrealized and realized” gains on the equity securities in its investment portfolio during the quarter, adding $77.1 billion to Alphabet’s overall net income after taxes. The investment gain accounted for $6.26 of Alphabet’s earnings per share of $9.11.
The majority of the $99 billion in “other revenue” comes from Alphabet’s AI investments, primarily Anthropic and SpaceX. While it’s unclear how much each investment contributed to the $99 billion profit, both companies saw their valuations jump in the second quarter.
SpaceX, in which Google owned a share of around 6% At the end of 2025, it went public at the beginning of June with a value of 1.77 trillion US dollars, a significant increase from that Valuation of $400 billion It was a private company a year ago. Meanwhile, Anthropic saw its private market valuation rise to $350 billion $965 billion in the same period. These massive paper gains have bolstered Alphabet’s investment portfolio and impacted its bottom line.
Alphabet’s huge paper profit is the result of a forward-looking bet on Anthropic That began in April 2023 with an initial $300 million investment in Anthropic, which has since grown to $13.3 billion, plus commitments of up to an additional $30 billion. As part of the agreement, Anthropic has committed to purchasing at least five gigawatts of computing capacity from Google Cloud; roughly the output of five nuclear reactors and enough electricity to power around four million households. This spending is going into the exact segment that Wall Street was watching on Wednesday – cloud growth at 82% growth.
Despite the record results, shares of Alphabet fell 3% in after-hours trading on Wednesday as investors worried about the company’s rising capital spending (Alphabet increased its planned 2026 spending to $195 billion to $205 billion from its previous estimate of $180 billion to $190 billion) and stiff competition from its Gemini family of AI models.
And while the company’s AI investments delivered eye-popping net profit numbers during the quarter, they could also raise circularity concerns. Each side of the relationship strengthens the other: Alphabet’s capital helps boost Anthropic’s valuation; Meanwhile, Anthropic is turning around and spending billions of its revenue on Google Cloud’s computing power, helping to offset the boom in cloud growth that investors saw on Wednesday. So the same dollars move in a loop: Google invests in Anthropic, Anthropic pays Google to process the data, Anthropic’s valuation increases, and Google records the increase as profit.
“It’s interesting that they can control or influence the value of one of their own assets,” said Robert Willens, the tax and accounting consultant Assets In Aprilwhen a smaller Anthropic markup accounted for nearly half of Alphabet’s first-quarter profit.