Amazon’s Anthropic Stake Could Boost Earnings with Significant Mark-to-Market Gain, According to BofA

Key Points

• Amazon’s stake in AI start-up Anthropic was valued at $74.2 billion at the end of Q1 2023.

• The upcoming IPO for Anthropic estimates the company’s value at approximately $1 trillion, potentially raising Amazon’s stake to over $200 billion.

Amazon (NASDAQ: AMZN) is set to report its second-quarter earnings on July 30, 2023. Analysts anticipate strong growth in its cloud computing division, Amazon Web Services, but concern over rising data center costs could impact its stock price. Despite concerns about capital expenditures, Amazon’s significant investment in Anthropic is expected to contribute positively to its earnings report.

Amazon’s initial investment in Anthropic amounted to $13 billion, with plans for an additional $20 billion. Currently, Amazon holds a 21% stake in Anthropic, which is poised to gain substantially from its pending IPO, projecting a valuation of around $965 billion. This could mean a potential increase of $128.4 billion in Amazon’s stake within a single quarter, surpassing its previous earnings numbers from Amazon Web Services.