So, let me get this straight. Amazon and Google just conjured nearly $20 billion in "profit" out of thin air, and the business press is dutifully reporting it like it’s real money. Like someone backed up a Brink's truck to their respective headquarters.
Give me a break.
This isn’t profit. It's a magic trick, a bit of accounting hocus-pocus designed to make you look at the shiny object—the booming valuation of an AI startup called Anthropic—while they light mountains of actual cash on fire in the background. And if you’re falling for it, then you’re the mark.
Let’s talk about how this little illusion works. Both Amazon and Google poured billions into Anthropic, the company behind the Anthropic Claude AI. Then, in September, Anthropic did another funding round and—poof!—its valuation shot up to a ridiculous $183 billion. Because of accounting rules I’m sure are perfectly legal and perfectly nonsensical, Amazon and Google now have to "mark-to-market" their investment.
This is the financial equivalent of your house's Zillow estimate going up. Did you get richer? On paper, sure. Can you spend that money? Not unless you sell the house. Amazon didn't sell its Anthropic stake. Google didn't sell its stake. No cash changed hands. They just got to write down a bigger number in their quarterly report. Amazon’s Anthropic investment boosts its quarterly profits by $9.5B. Google, a cool $10.7 billion.
This is just dumb. No, "dumb" isn't the right word—it's deliberately misleading. They're celebrating a paper gain on a hyper-volatile asset in a market that looks more like the 1999 dot-com bubble every single day. What happens when the Anthropic AI valuation gets cut in half next quarter? Do they have to report a multi-billion dollar "loss"? And will the headlines be as breathless then? I doubt it.
Just look at Microsoft for a dose of reality. They reported a $3.1 billion hit on their investment in OpenAI. Same game, different dice roll. One company's imaginary windfall is another's imaginary loss. It’s a collective hallucination we’ve all agreed to call "earnings." This ain't a sustainable business model; it's a casino.
While everyone is mesmerized by headlines like Alphabet, Amazon see higher profits from rising value of Anthropic stakes, the real story—the one that involves actual, physical money—is being ignored. The real AI news is the spending. The terrifying, world-altering, cash-incinerating spending.
Amazon spent $35.1 billion on property and equipment in a single quarter. That’s up 55% from a year ago. A huge chunk of that is going into things like "Project Rainier," an $11 billion AI data center complex built just for Anthropic. You can almost hear the forced calm in Amazon CEO Andy Jassy’s voice as he told Wall Street they’re going to "continue to be very aggressive investing."
His translation: "We are spending money so fast it would make your head spin, and we pray to god the AI revolution happens before the shareholders realize our free cash flow just dropped 69%."
Let’s be real. These paper gains are a smokescreen. A distraction. The $9.5 billion "gain" from Anthropic stock looks a lot less impressive when you see that Amazon’s core profit engine, AWS, saw its operating income growth slow down because of these massive investments. They’re building these digital cathedrals to an AI god that hasn't even shown up yet, and we're all just supposed to... what, applaud?
I run a couple of small servers for my site, and my cloud bill feels like extortion. These guys are building infrastructure on a scale that’s hard to even comprehend. And for what, exactly? So Claude can write slightly better poetry and we can get our search results a millisecond faster? The disconnect between the capital being burned and the tangible value being created is staggering. Offcourse, they'll tell you it's a long-term play. It always is.
At the end of the day, don't let them fool you. This isn't about profit. It's about a desperate, high-stakes land grab. Amazon, Google, and Microsoft are locked in a brutal war to own the computational foundation of the next decade. They're building the picks and shovels for an AI gold rush that may or may not ever truly pay off for society. The Google AI news and Amazon news you're reading is just PR for their respective armies.
These "profits" from Anthropic AI are a convenient narrative to keep Wall Street happy while they pour concrete and lay fiber. It’s a shell game. They move the paper gains around to distract you from the real cash going out the door. And we, the public, are just watching, thinking it’s all real. It’s not. It’s just the biggest, most expensive bet in human history, and nobody has any idea how it’s going to end.
