Alphabet’s wager on AI startup Anthropic is shaping up to be one of the most profitable investments in the tech giant’s history.

According to a Bloomberg report from July 24, based on regulatory filings submitted by Alphabet on Thursday, the company’s total investments in unnamed private enterprises were valued at approximately $124.3 billion as of June 30. A source close to the matter revealed that this figure is “predominantly” driven by a single holding: Alphabet’s stake in Anthropic.

The filings also show that Alphabet booked roughly $77 billion in unrealized gains from private investments during the second quarter. Combined with profits from other private holdings, including SpaceX, this contributed to nearly $100 billion in total quarterly gains from such investments, significantly boosting Alphabet’s net income.

Anthropic is currently preparing for its highly anticipated initial public offering, with reports suggesting the listing could occur as early as October. This timeline implies that the substantial unrealized gains on Alphabet’s balance sheet may soon face further market validation.

From $3 Billion to Over $100 Billion: A Staged, Escalating Gamble

Google’s investment in Anthropic was not a single, immediate event but rather a series of escalating commitments over several years.

Google first began investing in Anthropic in 2023, with an initial outlay of $3 billion. Earlier this year, the company agreed to inject up to an additional $40 billion, with $10 billion provided upfront and up to $30 billion more tied to Anthropic’s operational and financial milestones to be achieved by 2030.

Thursday’s filing from Alphabet provided the latest update: As of June 30, its remaining committed capital to Anthropic had decreased from $30 billion at the end of the first quarter to $20 billion. This indicates that Google infused roughly another $10 billion into Anthropic during the most recent quarter.

Anthropic has emerged as OpenAI’s primary rival in the frontier AI model space, attracting dual backing from both Google and Amazon. This reflects a broader industry race among tech giants to secure equity stakes in leading AI startups.

Reports indicate that the presence of both Google and Amazon as significant shareholders in Anthropic is a rare dynamic in the AI investment landscape, underscoring Anthropic’s strategic importance in the large language model race.

As expectations for an IPO heat up, the valuation of Anthropic and the value of its equity are drawing intense market scrutiny. The stake held by Alphabet has become one of the most valuable assets on its balance sheet.

The paper profits from this investment have already had a tangible impact on Alphabet’s financial results.

Alphabet recorded approximately $77 billion in unrealized gains from private investments in the second quarter. Combined with gains from other private holdings, including SpaceX, total private investment gains for the quarter approached $100 billion, directly boosting the company’s net income.

However, Alphabet stated that it cannot provide further details beyond its quarterly filings. It is worth noting that these gains remain unrealized and their ultimate realization will largely depend on the pricing and market performance of Anthropic’s IPO.