The Q1 earnings from GOOGL and AMZN were more than half unrealized (estimated) gains from their stakes in Anthropic

Private equity valuations are notorious for not being based in reality and actualized cashflows. Plus, there are whispers that they will be negative cashflow in around nine months, and 40% of data centers are behind schedule. >\[Amazon\]'s $8 billion investment in Anthropic is now worth more than $70 billion, according to Amazon. They added that Amazon’s investment in Anthropic is separate from its commercial relationship. To me, this is one of the symptoms of the "circular financing" that people keep referencing. These companies bought stakes in Anthropic, and then later claim that the value of that investment has skyrocketed. However, updating stake values for earnings is standard practice. >Robert Willens, a tax and accounting consultant who has served as an adjunct at Columbia Business School, told *Fortune* the accounting itself is uncontroversial. Companies that hold equity stakes in private firms are required to update those stakes’ value when a new funding round sets a price. It comes down to whether or not you believe that Anthropic can be cashflow positive anytime soon, and whether or not you believe that the fundraising rounds represents legitimate value. >Alphabet and Amazon are two of those investors. When they put more money into Anthropic, or commit to spending billions on cloud capacity for it, that helps push Anthropic’s valuation up. And when Anthropic’s valuation goes up, the stake Alphabet and Amazon already own goes up with it. They book that increase as profit; in this case, a substantial cut of their profits, even more than half.