Analysis: AI Giants' Soaring Profits Propped Up by "Other Income"

Odaily reports that AI hyperscale cloud service providers have announced strong first-quarter earnings, but for some companies, the performance was significantly boosted by a rather special line item on the income statement: "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 for the period. Microsoft reported $942 million in other income in the first three months of this year, with a cumulative contribution of $7.2 billion from this item over the past nine months.

Oracle did not disclose any other income, while Meta posted a loss of $1.1 billion. "Other Income" represents the gains and losses from changes in the valuation of equity investments these companies hold in a large number of unlisted firms, such as OpenAI and Anthropic. Alphabet is the largest investor in Anthropic, with Amazon also being one of its major investors.

Goldman Sachs analysts wrote last week: "This quarter, profit growth for hyperscale cloud vendors was fueled by an unusually large contribution from equity investments in private companies. Alphabet and Amazon combined for $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 $155 billion total profit for the five major hyperscale cloud vendors this quarter. This is the highest share in at least the past decade." This once again shows that the AI tech industry has now formed a nearly absurd state of interdependence. (Jinshi)