Alphabet, Amazon P/E Ratios Understate Valuations as $98 Billion Alphabet Gain Inflates Earnings
Updated
Updated · Yahoo Finance · Aug 23
Alphabet, Amazon P/E Ratios Understate Valuations as $98 Billion Alphabet Gain Inflates Earnings
3 articles · Updated · Yahoo Finance · Aug 23
Summary
Alphabet at 17 times earnings and Amazon at 20.9 times only look cheaper than the S&P 500’s 24.2 because one-time investment gains have inflated reported profits.
Anthropic is the main distortion: both companies marked up their stakes after its latest funding round valued the AI firm at $965 billion, even though neither company sold shares.
GAAP accounting requires those unrealized gains to flow through earnings per share, lifting EPS and mechanically pushing down the P/E ratios investors often use to judge value.
Alphabet’s distortion is larger still, with SpaceX and Anthropic helping drive $98 billion in Q2 'other income,' suggesting the headline multiples understate their true valuations.