Key Points
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Alphabet disclosed in July that its private-company holdings were worth $124.3 billion at the end of the second quarter, with the figure primarily reflecting its investment in Anthropic.
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Anthropic has reportedly delayed its initial public offering to November and is seeking a valuation of approximately $2 trillion.
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A listing at that valuation could substantially increase Alphabet’s carrying value of the stake, though it would not generate immediate cash or operating profit.
Alphabet faces an unusual pair of valuation figures tied to Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG).
The Google parent’s July quarterly filing revealed its stakes in private companies were valued at $124.3 billion as of the second quarter, describing the amount as “primarily” reflecting one investment. While Alphabet does not disclose the company name, Bloomberg reported it is Anthropic, the artificial intelligence company behind the Claude models.
Image source: Alphabet.
Valuation Methodology
Alphabet’s holding is valued using accounting standards for private companies without market prices: the position is carried at cost and adjusted only when an observable transaction occurs involving identical or similar shares.
In other words, the $124.3 billion represents the value implied by the most recent trade in Anthropic’s stock—not an estimate from Alphabet. The same bucket of investments was valued at $35.2 billion at the end of 2024 and $64.1 billion at the end of 2025, reflecting price increases from subsequent funding rounds. While other investments were included, Alphabet’s SpaceX stake was removed after that company’s market debut earlier this year. The Anthropic component of the June figure dates to late May, when the company closed a $65 billion funding round at a $965 billion valuation.
Notably, Alphabet’s total cost basis for all investments in this bucket is $47.6 billion, with the remainder representing unrealized gains from prior transactions.
Impact of a November Listing
According to The Wall Street Journal, Anthropic has delayed its planned initial public offering from October to November, allowing investors to review third-quarter results first.
Market expectations suggest the company may seek a valuation of roughly $2 trillion and raise up to $100 billion, though these figures remain speculative.
Alphabet has not disclosed its specific ownership percentage in Anthropic. This detail is less critical than it appears, as the company’s stake will be valued at the market price regardless of percentage upon listing.
A $2 trillion valuation would approximately double the $965 billion figure from June, potentially doubling Alphabet’s carrying value for its Anthropic stake to around $248 billion.
The accounting treatment would also change. Once Anthropic’s shares trade publicly, Alphabet’s holding would move into marketable securities and be repriced quarterly based on market prices, similar to how Alphabet’s SpaceX shares were treated after that company’s IPO.
Unrealized Gains, Not Cash Flow
Alphabet’s second quarter results already demonstrated the impact of such valuations. Revenue increased 24% year over year to $119.8 billion, with operating income rising 30%. However, net income surged 298%, and earnings per share nearly quadrupled to $9.11, largely due to $98 billion in other income—primarily unrealized gains on equity securities.
A November listing at the reported target could generate additional gains through the same other-income line, though without adding actual cash or operating profit. Any tax liabilities on these gains would generally be deferred.
Conversely, if Anthropic’s stock underperforms after its debut, Alphabet would record losses in its income statement.
For investors, Alphabet’s Anthropic stake represents a substantial asset with significant unrealized appreciation potential. At current carrying value, it constitutes approximately 3% of Alphabet’s $4.1 trillion market capitalization.
However, the core investment thesis remains centered on Alphabet’s operating business. At approximately $338 per share, the stock trades at a price-to-earnings ratio of about 23 based on expected 2026 earnings.
Investors should evaluate Alphabet’s quarterly results by excluding the Anthropic-related gains to assess the underlying business performance.
Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
