Microsoft, Amazon, and Alphabet’s private investments in AI firms like Anthropic and OpenAI inflated S&P 500 earnings growth by nearly 20 percentage points.
Microsoft, Amazon, and Alphabet reported significant gains in the latest quarter from stakes in private AI companies Anthropic and OpenAI, distorting corporate earnings. These investments, valued near $1 trillion, contributed to a 48% year-over-year earnings growth for the S&P 500, according to LSEG data.
Without these gains, earnings growth would have been closer to 29%, aligning more with the 24% consensus forecast. The surge in private valuations for AI firms has created a disconnect between reported profits and core business performance.
The outsized impact of a few companies’ venture investments highlights how non-operational gains are skewing broader market metrics. Analysts caution that such distortions may not reflect sustainable earnings trends.