Amazon is the latest Big Tech company to report abnormally large earnings growth, thanks to paper gains on Anthropic investments

Amazon's earnings per share more than tripled in the latest quarter - and paper gains played a big role.

Another week, another Big Tech company putting up unusually large profit growth thanks to artificial-intelligence developer Anthropic - at least on paper.

First, Alphabet $(GOOGL)$ $(GOOG)$ put up a 300% jump in second-quarter earnings per share thanks in large part to unrealized gains from its stakes in SpaceX $(SPCX)$ and Anthropic. Then on Thursday, when Amazon.com (AMZN) posted a 242% EPS increase for the quarter, the company acknowledged more than $50 billion in paper gains derived mainly from its investment in Anthropic.

Those gains drove a massive earnings beat - the company put up $5.75 a share, compared with analyst estimates for $1.82 - and made Amazon the biggest driver of earnings growth overall for companies in the S&P 500 SPX last week, according to a FactSet report published Friday. Amazon on its own accounted for more than three-quarters of the net dollar-level gains in earnings for the index during the week.

The contributions from Alphabet and Amazon put the S&P 500 on track for a wild second-quarter earnings-growth rate of 47.4%, when combining actual company results and estimates from those yet to report, according to FactSet.

That would be the strongest growth rate for the index since the second quarter of 2021, when reopenings from pandemic lockdowns and the resulting upheaval in the economy led to a 91.6% gain.

Microsoft $(MSFT)$ last week also said its second-quarter earnings reflected a $3.2 billion gain from its investment in Anthropic.

A week earlier, before Microsoft and Amazon reported results, FactSet noted the blended earnings-growth rate for the index was around 38%.

The investments in Anthropic have padded the tech companies' per-share profits as investors remain concerned about circular dealmaking in the AI industry and the monumental costs required to build data centers and other infrastructure for the technology. Amazon on Thursday said it was now planning for around $220 billion in capital expenditures this year, up from prior expectations, as it invests in AI but grapples with higher costs for memory chips - a byproduct of the AI race.

"But even at that amount, we will still not have enough capacity to meet all the demand we have in 2026, and I believe this dynamic will also be true in 2027 too," Amazon CEO Andy Jassy said on the company's earnings call Thursday.

"In fact, the demand we already have for 2028 is striking," Jassy continued. "And remember, enterprises are still very early in using inference at scale in their current production applications."

-Bill Peters