Big Tech’s circular AI trade grows too big to veil

SpaceX and Anthropic lose money but account for half the $280 bln rise in S&P 500 earnings this quarter. How? Paper gains at Google and Amazon from their investments in the hot startups. As massive spending turns cash dispensers into incinerators, the logic gets harder to follow.

Of the 305 companies in the S&P 500 Index that have reported second-quarter results, 86% exceeded estimates for their earnings per share, a bigger proportion than the five-year and 10-year averages, FactSet said on July 31.

The combined growth rate in earnings thus far is 47.4%, but drops to 28.8% excluding Alphabet and Amazon.com, both of which reported significant unrealized gains from their respective investments in rocket-maker SpaceX and artificial intelligence startup Anthropic.