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Google-parent Alphabet Inc. GOOG GOOGL just posted the largest quarterly profit in its history — but most of the $112.1 billion windfall didn’t come from its Search or Cloud business. It came from paper gains on its investments in Anthropic and newly public SpaceX SPCX.
SpaceX Gains Drive Record Quarterly Profit
Alphabet earned $9.11 per share on $119.8 billion in revenue, up 24% from a year earlier. But it recorded a roughly $98 billion net gain, mainly from equity investments.
SpaceX priced its record IPO at a $1.75 trillion valuation, sharply lifting the value of Alphabet’s longtime holding. Investors had already viewed Alphabet as a backdoor route into both SpaceX and Anthropic.
Anthropic Ties Fuel Cloud Growth Story
Anthropic likely supplied another major valuation catalyst, though Alphabet did not disclose each holding’s contribution. The Claude developer raised $65 billion in May at a $965 billion valuation, weeks after Google committed $10 billion upfront and as much as $30 billion more if Anthropic meets performance targets.
The relationship extends beyond passive investing. Anthropic has signed multibillion-dollar agreements for Google’s cloud infrastructure and AI chips, connecting the startup’s expansion to Google Cloud, where revenue surged 82% to $24.8 billion.
"Our AI investments are redefining what’s possible across every part of our business," CEO Sundar Pichai said.
Emarketer analyst Nate Elliott called the results "impressive" in a statement shared with the Associated Press, saying enterprise AI demand was driving "enormous growth" in Cloud while advertising growth supported Google’s argument that AI adds to Search rather than replacing it.
Rising AI Spending Worries Investors Despite Growth
Still, investors focused on the bill. Alphabet’s shares dropped 3% in after-hours trading on Wednesday despite blowout results, after the YouTube owner raised its 2026 capital-spending forecast to $195 billion to $205 billion from $180 billion to $190 billion, while free cash flow turned negative by $5.9 billion. Finance chief Anat Ashkenazi said, "The demand still outpaces that investment."
Alphabet effectively reported two quarters at once, with strong operating growth from advertising and Cloud, and a historic profit inflated by investment gains that could reverse if market valuations retreat.
Benzinga edge rankings indicate that GOOG stock has a Momentum score in the 87th percentile and a Growth score in the 89th percentile.
Image via Shutterstock
© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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This article Alphabet's $112 Billion Quarterly Profit Looked Like an AI and Search Victory, but SpaceX and Anthropic Actually Powered the Historic Windfall originally appeared on Benzinga.com.
