Google just reported $99 billion in profits it never actually received. Alphabet posted net income of $112.1 billion for a single quarter. Earnings per share came in at $9.11 against a Wall Street estimate of $2.87. That is one of the largest profit quarters any company has ever printed.... Yet the stock fell about 7% the same day. When people read past the headline and opened the earnings release, they found the reason sitting in one footnote... $99 billion of that profit came from a line called other income. Alphabet describes it as "primarily the result of net unrealized gains on our equity securities." So Google did not sell anything. It marked up shares it already owned and ran the increase through its income statement. That single line added $77.1 billion to net income after tax. It accounted for $6.26 of the $9.11 in earnings per share. Strip it out and adjusted earnings per share were $2.85. Analysts wanted $2.89. The ACTUAL business missed. Now here is what makes this insane: Most of that $99 billion came from two holdings, SpaceX and Anthropic. SpaceX went public on June 12 at roughly $1.77 trillion, up from about $400 billion a year earlier. Alphabet's stake is worth $94.1 billion, and roughly $80 billion of it sits under sale restrictions. Anthropic went from a $350 billion valuation to $965 billion inside the same quarter. Alphabet's private company holdings were worth about $124.3 billion on June 30, and the vast majority of that is Anthropic. Google cannot sell either position right now. Now trace where that valuation came from: Google started putting money into Anthropic in 2023. A $300 million bet has grown into a $13.3 billion position with commitments of up to $30 billion more. Anthropic committed to buying at least five gigawatts of computing capacity from Google Cloud. Google Cloud revenue then grew 82% to about $24.8 billion, the strongest quarter that business has ever had. That growth is part of the story the market uses to price both companies. And when Anthropic's valuation jumped, Google booked the jump as its OWN profit. Google is the investor, the supplier, and the party deciding what the asset is worth. A tax and accounting consultant named Robert Willens flagged this back in April, pointing out that Alphabet is able to influence the value of one of its own assets. And Alphabet's free cash flow for the quarter was negative $5.9 billion. That is the first negative quarter since Google went public in August 2004. Capital spending hit $44.9 billion. Operating cash flow was $39.1 billion. Capex now eats about 37.5% of every dollar of revenue, the highest share in the company's public life. To fund it, Alphabet has taken on roughly $100 billion of debt this year and raised about $85 billion in a June share sale, its first in more than two decades. This is a company that spent years buying its own stock back. What happens next: Alphabet raised 2026 capital spending guidance to between $195 billion and $205 billion, the second raise in three months. The finance chief told analysts 2027 spending will rise significantly. The company also disclosed $811 billion in contracted future spending commitments as of June, up nearly $500 billion from March. Those commitments are signed contracts that get paid in cash. The profit is an estimate of what a private company might be worth on a given day. Estimates move in both directions. If Anthropic or SpaceX gets repriced downward, the same line that produced the biggest quarter in Google's history runs backwards, and this quarter produced no free cash flow to absorb it. Meta, Microsoft and Amazon are all carrying their own private AI stakes into their own earnings reports. Watch how much of their profit they actually collected in cash...show more

Bunch of BS. Nothing wrong with owning good assets. Check how much yahoo made off of alibaba. Or BRK MADE off of aapl. Anthropic fastest growing company ever. 100 b arr by year end

Garbage post , Google is already below its 200 ma . What more do u want , just buy it

You write this as if it is manipulation rather than legally mandated GAAP accounting

Love this post. BUT ALSO, these were genius investments that did very well. Alphabet also has genius investments in energy and quantum which will be coming on line in the next few years. We should factor in the whole truth which includes these amazing investments and that the compute used by Anthropic is from real consumer demand.

I’m so tired of posts like this. All people need to do is read the cash flow statement when you’re concerned about the net income or balance sheet problems. The cash flow statement reconciles them. What matter is Google’s top line grew 24% while their Cloud business grew 80%+.

Great bearish analysis. Do you think they are richer or poorer for investment in soacex and anthropic? I wonder. So zeroing out the profits is convenient for a stupid bear. Also fcf is negative because of investment in the future. If you don’t believe they will generate a return, sell the stock. But those of us who do believe will keep buying as you retards keep selling. You enjoy your 10% decline while we will enjoy a double in 3-4 years. Lastly. Remember that accelerated canon the data centre spending can be written off quickly. So in essence they are spending pretax money. Spacex can’t shelter shit.

They’re forced to mark it. When a private company does a raise they have to to mark to the observable input. Spcx public so they have to mark at closing price every q. They would rather not mark them but account law dictates they do.

$GOOGL marks Anthropic/SpaceX to market — that’s why it got a real revaluation gain this quarter. $MSFT uses equity-method accounting for OpenAI, not mark-to-market. Its one big gain was a one-off dilution gain from OpenAI’s Oct 2025 PBC conversion — already booked. So no, MSFT has no similar unrealized-gains cushion pending, unless OpenAI raises again.

That’s cap ex related-D&A and interest expense. A .02c miss with the core business humming- is missing the broader point. You either believe ROIC in future years will materialize or you don’t. GOOGL’s management has been a terrific allocator of capital and they don’t throw this type of money around with a very high conviction ROIC will be there. The operating perform e of each business segment was above consensus and operating margins expanded YOY. Operating business is humming.

This sounds like the FASB accounting rule changes that affected how MSTR reported (or didn't report) their Bitcoin holdings. Investment holding changes should not be considered income. How dumb is this? It should just be reported as a separate line item so it doesn't swing earnings up and down like a roller coaster based on the unrealized gains/losses of investment assets.

This isn’t new, Berkshire Hathaway has been doing that for years

Yes, the $99b was on paper, but not their fault, it's accounting rule. $94 billion in $Spcx unrealized gain. Scored in June when Spacex=$135. Sure, SX down, but google still makes out like a bandit next quarter; same accounting rule turns the unrealized paper gain into realized gains over time. Googl paid $900 million for Spacex shares. Even at today's reduced SX price that's like $64billion! So the 3rd quarter goes from paper to hard cash.

This is a great post mate

Google’s $112 Billion Profit… But Is This All BS? $GOOG $GOOGL

Cloud事業の好調は、バックログ5.8年分の$514Bの一括計上による演出だ。クライアントがキャンセル可能な数字だ。さらに簿外債務$410Bは本表に計上されてない。つまりネット・エクスポージャーはわずか$26Bしかなない。

Great post

This is not either surprising, obscure or profound. Every professional investor has known ahead of time that headline EPS isn't the one to consider. The whole thing is transparent and known which makes this post of yours a nothing burger

It's mark to market, obviously. But you're an astute reading of financial statements and you've obviously have sniffed out something Buffet missed. Well done!

So you are telling me that Google $GOOG has been an amazing capital allocator and has made billions in gains on investment and now they are borrowing money to invest in themselves and in their cloud business. Time to buy more $GOOG is what it sounds like.

$99B of that "profit" is a mark, not cash that arrived. Years in distressed taught me the gap between what an asset is marked at and what it actually pays is where people get hurt. The market saw a paper gain dressed as earnings and sold. Rightly.

Yeah its called accounting fraud.

This is a COMPLETR BULLSHIT. Your investment is not counted as income? Are you brain damaged totally?

The facts described in this post are accurate. But from an accounting standpoint, Alphabet had no choice. This was standard compliance under U.S. GAAP. The post zeroes in on a structural feedback loop that makes tech observers and investors uneasy: 👉​Google invests heavily in an AI partner (e.g., Anthropic). 👉​The AI partner commits billions to buy compute from Google Cloud. 👉​Google Cloud records surging revenue growth (+82%). 👉​The AI partner’s market valuation skyrockets based on that growth. 👉​Google marks up the value of its stake and books it as net profit on its own income statement. While entirely legal, this loop means vendor and investor relationships feed each other's valuations and income statements.

This goes well beyond creative accounting… It’s securities fraud.

Your analysis is nonsensical. This item is not included in their revenues, not included in their operating income, and their GAAP EPS came in at $2.95 vs. consensus of $2.87. $GOOG

Yes, agreed. But it's not all negative. There are positives. PLUS $Goog reporting this as income is as per US GAAP rules. Point is they are visionary and invested wisely.

It's called marking to market. Standard accounting.

Did you also adjust tax line?

Earnings quality matters more than headline numbers. Investors often look beyond reported profits to understand how much comes from core operations versus accounting gains, one-time items, or market value changes. Strong analysis focuses on cash flow, business performance, and sustainability. Stay informed with market insights: #Stocks #Investing #Markets #Finance

All will get hair cut imo.

@grok can verify the numbers and also explain how unrealized gain is shown as other income

Q3 will be negative. Q4 will be positive.

True. And this is why when assessing $GOOG and the like, it’s crucial to look beyond a single fundamental (like net profit) or a single quarter—you have to look at the big picture. Warren Buffett did exactly that this year, and I’m glad I did too back when the P/E was at 20👇

It’s always more prudent to look at EBITDA or the cash flow statement as a whole rather than the P&L account as a whole. That reflects the cash position rather than notional figures.

And here's where China's role as a rival player comes in, one that will bankrupt all American AI companies.