1.  Hyperscalers’ earnings growth this quarter was boosted by an unusually large contribution from “other income,” which was actually mark-ups of their equity stakes in private Gen AI companies.  For example:

• Nearly half of Alphabet’s (Google) record $62.6 billion profit—about $28.7 billion—did not come from search ads, cloud services or any of its products at all. It came from Alphabet updating the value of the equity it owns in private AI companies, primarily Anthropic.  Alphabet holds a 14% stake before the announcement of an additional $40 billion commitment last week.
• Amazon’s earnings release stated that first-quarter net income “includes pre-tax gains of $16.8 billion included in non-operating income from our investments in Anthropic”—more than half of Amazon’s pre-tax income (or profit) for the quarter.
• Alphabet and Amazon generated “other income” totaling $53 billion in Q1 2026, which accounted for nearly 60% of those two companies’ total net income in Q1 and 34% of the total $155 billion in income this quarter. Of this $53 billion in “other income,” $49 billion was explicitly due to equity stakes in private AI companies.
• Microsoft reported “only” $942mn of other income in the first three months of the year, but this line item has now made $7.2bn over the past nine months.
• Under U.S. accounting rules, publicly traded firms must adjust and report the assessed value of their private equity holdings every quarter. Because private AI start-ups like Anthropic experienced meteoric valuation updates (e.g., Anthropic climbing to an estimated $380 billion), both Alphabet and Amazon were required to record those massive “on-paper” gains directly to their bottom-line net income

2. Now here’s the merry-go-round relationship: Not only have private investments and increasingly engorged funding rounds become a meaningful driver of the hyperscalers’ aggregate earnings, but the money the hyperscalers have pumped into the likes of Anthropic and OpenAI has allowed those private AI companies to sign huge computing deals with Alphabet’s Google Cloud, Microsoft’s Azure and Amazon Web Services (AWS).  OpenAI and Anthropic now make up about half of the entire cloud computing order books at Oracle, Alphabet, Amazon and Microsoft!  

Indeed, AI startups have loaded up hyperscalers with unprecedented long-term financial commitments. OpenAI and Anthropic make up over $1 trillion of the estimated $2 trillion cumulative revenue backlog currently held by major cloud service providers.

• OpenAI to Microsoft Azure: Internal documents show OpenAI’s massive server rentals have generated more than $23 billion in direct cloud spending for Microsoft.
• Anthropic to Google Cloud: Anthropic signed a contract committing to spend $200 billion over five years on Google’s cloud infrastructure and TPU chips.
• Anthropic to AWS: In tandem with a fresh $5 billion investment from Amazon, Anthropic committed to spend over $100 billion over the next decade on AWS technologies.

• • Backlog Percentage: Over 40%. Anthropic‘s $200 billion Multi-Year Commitment accounts for nearly half of Google Cloud’s total disclosed $240 billion revenue backlog.
  • Current Revenue Share: Estimated 12% to 15% of its current $20 billion quarterly revenue run-rate is driven directly by AI infrastructure consumption from startups (both frontier labs and over 40 mid-tier AI companies built on Google Cloud Vertex AI).

• • Current Revenue Share: Estimated 15% to 18%. Microsoft’s annualized AI revenue run-rate hit $37 billion. A massive chunk of Azure’s overall 40% growth rate is anchored directly by OpenAI’s compute demands and the commercialization of OpenAI-tied products.

• Current Revenue Share: Estimated 6% to 8%. While AWS has the largest overall cloud scale ($150 billion annual run rate), its revenue is traditionally diversified across enterprise SaaS and retail. However, Anthropic’s new $100 billion infrastructure commitment means AWS’s revenue mix is aggressively shifting toward AI startups. [1, 2, 3, 4]

–>This is another sign of just how incestuously codependent the big tech industry is to astronomically valued private AI start-ups.

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4. Another example of this codependency is Oracle and OpenAI’s massive, debt-fueled financial loop. In September 2025, the two companies signed a staggering five-year, $300 billion cloud-computing contract. This single deal radically transformed both companies’ financial profiles, binding their survival together as inextricably tied.

• • For Oracle: The $300 billion contract instantly added to Oracle’s Remaining Performance Obligations (RPO), which skyrocketed 359% to $455 billion. This accounting metric allowed Oracle to position itself as a dominant “hyperscaler,” pushing its market cap upward.
  • For OpenAI: The contract allowed OpenAI to claim it had secured the long-term compute capacity needed to achieve Artificial General Intelligence (AGI). This backed up its massive valuations, enabling OpenAI to close a historic $122 billion funding round in March 2026 at an $852 billion valuation.  

• Oracle is a Financial Proxy for OpenAI: If OpenAI faces a “credit event” or cash crunch, Oracle’s stock directly plummets. Critics note that Oracle signed a contract with a startup that historically burns far more cash than it takes in, making OpenAI’s ability to actually pay the $300 billion highly volatile.
• The Debt Spiral: To physically fulfill OpenAI’s compute demands, Oracle has gone on a massive, debt-fueled construction spree. Oracle raised $18 billion in bonds in late 2025 and an additional $30 billion in early 2026. Its capital expenditures have eclipsed operating cash flows, leading to deeply negative free cash flow and over $134 billion in total corporate debt.

• • Project Finance Bottlenecks: Major commercial banks have struggled to syndicate the massive multi-billion-dollar construction loans Oracle needs to build out the required data centers (such as its 4.5-gigawatt capacity goals).
  • Bank Limits: The sheer volume of debt concentrated around this single enterprise relationship has pushed several Wall Street institutions against their regulatory exposure limits for a single corporate partnership.

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References:

https://www.ft.com/content/be97df0a-76b1-4cb0-9ba4-d1117d8d1450
https://fortune.com/2026/04/30/google-amazon-ai-profits-anthropic-stake-bubble-earnings-2026/
https://finance.yahoo.com/sectors/technology/articles/google-amazon-biggest-profit-driver-170449859.html

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