Amazon Sees $9.5 Billion Gain from Anthropic Investment, Boosting Quarterly Profits

Amazon reported a $9.5 billion pre-tax gain, boosting its quarterly profits, largely due to its investment in AI startup Anthropic. This non-operating gain is comparable to the $11.4 billion in quarterly operating profits generated by Amazon Web Services (AWS). The gain was the result of a mark-to-market adjustment following Anthropic's new funding round, valuing it at $183 billion. Amazon's third-quarter profits increased by 38% to $21.2 billion, with the $9.5 billion gain included in non-operating income. Additionally, Amazon increased its spending on property and equipment to $35.1 billion in the third quarter, a 55% rise from the previous year. CEO Andy Jassy assured investors that this significant investment will be worthwhile. AWS reported a significant increase in sales, rising from $20 billion to $33 billion in the quarter, but operating income only grew modestly from $9.6 billion to $11.4 billion. These investments, particularly in data centers, have also reduced free cash flow by 69% to $14.8 billion over the past year.

Amazon's stock price increased by nearly 2% in pre-market trading. This rise was primarily driven by two key developments: the completion of Amazon's AI supercomputer and an expansion of its partnership with the artificial intelligence company Anthropic.