Alphabet Reportedly Values Its Anthropic Stake at $124 Billion. A $2 Trillion IPO Could Double It -- on Paper.

There's an odd pair of numbers tied to Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG).

The Google parent's July quarterly filing said its stakes in private companies were worth $124.3 billion at the end of the second quarter and that the figure "primarily" reflects one investment. Alphabet doesn't name the company. But Bloomberg reported that it's Anthropic, the artificial intelligence (AI) company behind the Claude models.

Anthropic, meanwhile, is reportedly looking to go public in November at a valuation of around $2 trillion.

On the surface, it can seem like Alphabet's stake is about to grow 16-fold. But the two numbers measure different things.

The $124 billion is what Alphabet's piece was worth at the latest price investors paid for Anthropic stock. The $2 trillion would be a price for the whole company. Here's what a November listing would and wouldn't change for Alphabet.

Image source: Alphabet.

The number moves in steps

Alphabet holds the stake under an accounting method for private companies with no market price: The position sits at cost and gets adjusted when an observable transaction (somebody buying identical or similar shares) resets the price.

Put another way, the $124.3 billion isn't Alphabet's guess at what Anthropic is worth. It's the value implied by the last trade in the company's stock.

The same bucket of investments was carried at $35.2 billion at the end of 2024 and $64.1 billion at the end of 2025 -- stepping up when outside investors paid higher prices. It wasn't just Anthropic back then, though. The bucket also had Alphabet's stake in SpaceX until its market debut earlier this year. The Anthropic part of the June number dates to late May, when the AI company closed a $65 billion funding round at a $965 billion valuation.

The thing that catches my eye is the cost. Alphabet's total cost of everything in that bucket is $47.6 billion. The rest is markup from other people's funding rounds.

What would a November listing change?

The Wall Street Journal said on Sept. 18 that Anthropic pushed its planned initial public offering (IPO) from October to November, a delay some of its advisors wanted so investors could see third-quarter results first.

Investors reportedly expect the company to seek a valuation of roughly $2 trillion and raise up to $100 billion. Of course, these are expectations, not commitments.

Notably, Alphabet has never said what percentage of Anthropic it owns. It matters less than it seems. If Anthropic lists, Alphabet's shares get whatever price the market sets, whatever the percentage.

And a $2 trillion valuation would be roughly double the $965 billion behind the June figure -- so the stake Alphabet carries at about $124 billion could be marked at about twice that.

A listing would change the accounting, too. When Anthropic's stock has a market price, the stake moves into marketable securities, where it's repriced at the market's number each quarter. Alphabet's SpaceX shares made that same move after the rocket builder's IPO.

Paper, not cash

Alphabet's second quarter already showed what these markups do to reported results. Revenue rose 24% year over year to $119.8 billion, up from 14% growth in the year-ago quarter, a pickup driven by an 82% jump in Google Cloud. Operating income climbed 30% year over year. But net income soared 298%, and earnings per share almost quadrupled to $9.11, since other income showed a $98 billion net gain, up from $2.7 billion a year before -- mainly unrealized gains on equity securities. The business didn't suddenly make four times as much money. Most of the gap was its portfolio getting marked up.

A listing around the reported target could bring another gain like that, arguably a bigger one, flowing through the same other-income line. But it wouldn't add a dollar of cash unless Alphabet sells shares, and it wouldn't raise revenue or operating income. The tax Alphabet books on these gains is mostly deferred, too.

Still, the changes go both ways. If Anthropic's stock has a rough quarter after its debut, the drop lands in Alphabet's income statement as a loss.

What should investors take from the two numbers? I see the stake as a very large asset that could grow much larger in November, on paper, at a price Alphabet doesn't control. At the current carrying value, it's roughly 3% of Alphabet's $4.1 trillion market value.

Step back, though, and the reason to own the stock is still the operating business. At around $338 as of this writing, the stock's price-to-earnings ratio using next year's expected earnings is about 23.

If the listing headlines come, I think the right way to read that quarter's Alphabet report is with the Anthropic gain taken out. What's left is how the business is doing.

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.