Tech giants like Amazon (AMZN) and Alphabet (GOOG) have powered the stock market to record highs. But in recent months, a big driver of those two companies’ profits came from an unusual source: The increasing value of their investment stakes in artificial intelligence companies, according to a really important piece (in my opinion) by Joe Rennison in the New York Times on August 14.
“Over 70% of Alphabet’s net quarterly income came from investments in other companies, and in particular, in Elon Musk’s SpaceX, according to a recent regulatory filing and analysis from Satori Insights, a financial markets research firm. SpaceX went public in June in the biggest initial public offering ever.
Investment gains also accounted for roughly 65% of Amazon’s net income, largely stemming from its stake in Anthropic, a leading A.I. start-up that is also planning to go public.
Those gains underscore a growing vulnerability in the broader stock market: The companies that keep pushing the market higher are increasingly dependent on each other’s success.”
“It’s circular,” Matt King, founder of Satori Insights, told the Times. “What’s funding A.I. is now increasingly more A.I.”
Unrealized investment gains are added to a company’s profit for accounting purposes, according to the value of holdings at the end of each quarter. Unless the company sells any of the stakes, the gains are purely on paper. It also works in reverse: A decline in the value of investment holdings during a quarter can subtract from a company’s reported earnings.
Worries about the circular nature of the A.I. boom have persisted for some time, as investors have watched the dominant tech giants, chipmakers and A.I. labs invest in or loan each other money. That money is often then used to buy products or cloud services from the same companies funding them.
“The stock market was never just a reflection of the economy, but it’s now become one of the economy’s main engines,” said King.
Overall, the Magnificent 7 pulled in $315.6 billion in net profit for the second quarter. That covers the three months through June for all of the companies except Nvidia, which has a slightly different financial year.
Of that total, $134.6 billion, or about 42 percent, came from investment gains, according to calculations made by King, who adjusted the companies’ reported numbers to account for taxes. Other sources of net profit are typically earnings from the sale of goods and services.
Without those investment gains, profits for this group would have been roughly equal to the previous quarter–not growing, according to King. Microsoft (MSFT) , Meta Platforms (META), Apple (AAPL) and Tesla (TSLA) did not report any comparable investment income.
Nvidia reported roughly $13 billion in investment gains for its most recent quarter. The chipmaker has stakes in OpenAI and Anthropic, as well as investments in other A.I.-related companies, including CoreWeave (CRWV) and Applied Digital (APLD), which rent data-center access to high-powered processors for A.I. models.
The second-quarter investment gains for these Magnificent Seven companies were a much larger share of overall profits than the 5% they totaled in the previous quarter, according to King’s calculations.
We’ll get another deep look into this AI circularity when Nvidia reports quarterly earnings after the close on August 26. On Friday Nvidia disclosed a nearly $21 billion stake in Elon Musk’s SpaceX and a $30 billion one in Intel (INTC).
The AI chipmaker had about 122.8 million shares in SpaceX (SPCX) as of June 30, according to a regulatory filing made Friday. It held about 214.8 million shares in Intel.
The disclosure marks the first time that Nvidia has given the value of its SpaceX position since it invested in Musk’s artificial intelligence startup xAI, which was folded into SpaceX ahead of an unprecedented public offering earlier this year. Nvidia had put as much as $2 billion into xAI in 2025 by way of a financing that included equity and debt in a special purpose vehicle designed to buy its processors for xAI’s massive computing project, Bloomberg then reported.
The value of Nvidia’s stake in Intel has skyrocketed from just three months earlier when it was worth roughly $9.5 billion, based on regulatory filings. That investment dates back to last year when Nvidia agreed to invest $5 billion in Intel and announced the two would co-develop chips for personal computers and data centers in what was seen at the time as a surprise move that would prop up an ailing archrival.
Nvidia also had stakes in Coherent (COHR), Generate Biomedicines (GENB), Nebius Group (NBIS), Nokia (NOK) and Synopsys (SNPS) as of June 30.
