Analysis: AI giants' profits surge, fueled by "other income"

AI hyperscale cloud service providers reported strong first-quarter results, but some of these companies benefited significantly from a rather unique item on their income statements: "Other Income." Alphabet recorded $37.7 billion in "Other Income" in the first three months of this year alone, accounting for more than half of its net profit during the same period. Microsoft recorded $942 million in Other Income in the first three months of this year, and this item has contributed a cumulative $7.2 billion over the past nine months. Oracle did not disclose any other income, while Meta recorded a loss of $1.1 billion. "Other Income" refers to the gains and losses resulting from changes in the valuation of these companies' large holdings in private companies (such as OpenAI and Anthropic). Alphabet is the largest investor in Anthropic, and Amazon is also one of its major investors. Goldman Sachs analysts wrote last week, "This quarter, hyperscale cloud vendors' profit growth was driven by an exceptionally large contribution from equity investments in private companies. Alphabet and Amazon recorded a combined $53 billion in 'other income' in the first quarter of 2026, accounting for nearly 60% of the two companies' profits for the quarter, and 34% of the total $155 billion in profits from the top five hyperscale cloud vendors this quarter. This is the highest percentage in at least the past decade." This again demonstrates that the AI ​​technology industry has now formed an almost absurd interdependence. (Jinshi)