The mysterious $53bn ‘other income’ boost to AI hyperscaler earnings
FT dug into the hyperscalers' Q1 2026 numbers and found something that should be getting more attention than the headline capex figures.
Per a Goldman Sachs note they quote:
>Alphabet and Amazon generated "other income" totalling $53 billion in Q1 2026, which accounted for nearly 60% of those two companies' income in Q1 and 34% of the total $155 billion in income this quarter across the five largest hyperscalers. This represents the group's largest collective share of earnings attributable to "other income" in at least a decade. Of this $53 billion in "other income," $49 billion was explicitly due to equity stakes in private companies.
In other words: more than half of Alphabet's net income last quarter was not from selling ads or cloud, it was an accounting markup on its Anthropic stake. Amazon's was nearly half. Anthropic's valuation jumped from $183bn in September to $380bn in February and $850bn now, and the hyperscalers get to book the implied gain straight to the bottom line.
The circle is now fully closed:
- Hyperscalers pump tens of billions into OpenAI and Anthropic.
- Those investments push the labs' valuations up, letting the hyperscalers mark up their stakes and book it as "other income."
- The labs turn around and spend the same money on compute from Google Cloud, Azure and AWS.
FT calls it "comically codependent." Feels generous.
Source: https://www.ft.com/content/be97df0a-76b1-4cb0-9ba4-d1117d8d1450