Anthropic carries the convertible notes it issued to Amazon as a liability of $108.6 billion. Amazon carries the same notes as an asset of $97.9 billion. Both figures are as of 30 June 2026, from the Form S-1 Anthropic filed with the SEC on 26 October 2026 and Amazon’s quarterly report for the period to 30 June 2026.
The notes have $6.2 billion of principal outstanding. As Anthropic’s valuation rose, the notes rose in value on both sides: as a $72.4 billion charge in Anthropic’s first-half 2026 loss, and as gains in Amazon’s books, some in equity and some in net income.
Business Pill · AN OPTION
A short Business Engineer explainer on what an option is. It teaches the general idea only and says nothing about Anthropic, Amazon or their filings.
The key insight: As we read it, the new element is the mirror: the rise in Anthropic’s valuation is a $72.4 billion first-half charge on Anthropic’s income statement and, on Amazon’s side, a gain in equity (the unrealized gain on the notes rose from $39.5 billion to $92.0 billion) plus $62.8 billion of preferred-stock gains in net income.
Anthropic: convertible notes, a liability at fair value
$41.7 billion
$108.6 billion
A $72.4 billion fair-value charge in the first-half 2026 loss
Amazon: Anthropic convertible notes, an asset at fair value
$45.8 billion
$97.9 billion
Equity: unrealized gain of $39.5 billion, then $92.0 billion
Amazon: Anthropic nonvoting preferred stock
$14.8 billion
$92.5 billion
Net income: $62.8 billion of upward adjustments in the first half
Principal still outstanding on the notes
—
$6.2 billion
Non-interest-bearing; all held by Amazon
Sources: Anthropic, PBC Form S-1 filed 26 October 2026 (Level 3 fair value tables; Outstanding Notes); Amazon.com Form 10-Q for the quarter to 30 June 2026 (Non-Marketable Investments). Anthropic’s 31 December 2025 figure covers all its convertible notes at that date; at 30 June 2026 the S-1 says they consist entirely of Amazon’s notes.
Anthropic’s convertible notes to Amazon as recorded by each company: Anthropic’s S-1 liability at fair value ($41.7 billion at 31 December 2025, $108.6 billion at 30 June 2026) and Amazon’s 10-Q asset at fair value ($45.8 billion, $97.9 billion), plus Amazon’s Anthropic preferred stock ($14.8 billion, $92.5 billion), with where each change is booked.
Anthropic’s Side: A Liability Marked Up
Anthropic elected the fair value option for the notes, so it carries them at estimated fair value and records the changes in its statement of operations. The S-1 explains the effect: “Because these instruments are marked to market, increases in our enterprise valuation drive increases in this expense.”
Its Level 3 table shows the notes going from $41,677 million at the end of 2025 to $108,566 million at 30 June 2026, after $5,499 million was converted into preferred stock and a $72,388 million change in fair value. The principal owed is far smaller: $6,203 million across the Amazon 2023 and 2024 agreements, convertible into Class N shares at $2.0928 and $5.0478 a share or the IPO price, if lower.
Amazon’s Side: An Asset Marked Up
Amazon says it invested $8.0 billion in Anthropic convertible notes from the third quarter of 2023 to the fourth quarter of 2025, “which are classified as available-for-sale and reported at fair value with unrealized gains and losses included in” accumulated other comprehensive income. That puts the notes’ gain in equity rather than net income while they stay outstanding.
Net income comes in two other ways. When part of the notes converts, Amazon moves that slice of the gain into income: approximately $4.5 billion in the first half of 2026. And on the preferred stock it holds, it recorded upward adjustments of approximately $50.5 billion in the second quarter and $62.8 billion in the first half, “to reflect observable changes in price related to Anthropic’s fundings”.
Amazon, first half of 2026
Amount
Where it appears
Gain moved out of equity as part of the notes converted
Approximately $4.5 billion
Other income (expense), net
Upward adjustments to Anthropic nonvoting preferred stock
Approximately $62.8 billion ($50.5 billion in the second quarter)
Other income (expense), net
Total other income (expense), net
$69.1 billion
Primarily from the Anthropic items, Amazon says
Net discrete tax expense
$15.9 billion
Primarily attributable to the Anthropic upward adjustments
New money into Anthropic nonvoting preferred stock
$10.0 billion in the second quarter
Investing cash flows
Source: Amazon.com, Inc. Form 10-Q for the quarter to 30 June 2026, Note 1 (Non-Marketable Investments), Income Taxes and MD&A.
Amazon reports total other income of $69.1 billion for the first half of 2026, primarily from those Anthropic items, and $15.9 billion of net discrete tax expense “primarily attributable to the upward adjustments to our investments in Anthropic”. By our arithmetic, the two companies’ estimates of the same notes at 30 June 2026 differ by about $10.7 billion; each uses its own Level 3 valuation.
The Loop Around the Notes
The investment and the compute contract run side by side. Amazon says it invested $10.0 billion in Anthropic nonvoting preferred stock in the second quarter of 2026 and set up a financing facility not to exceed $20.0 billion, with amounts made available “as we reach certain delivery milestones of compute capacity under the amended commercial arrangement”.
In the S-1, Anthropic says it committed to spend at least $110.0 billion with Amazon between May 2026 and April 2036, “regardless of actual usage”. Amazon’s filing says AWS and Anthropic expanded their existing multi-year commitment by more than $100.0 billion over 10 years. The S-1 names the tension itself: “Our reliance on a limited number of CSPs and suppliers, some of which have strategic and investment relationships with us and are our customers, creates complex dynamics that could give rise to conflicts of interest and adversely affect our access to compute.”
Google’s side is harder to read. The S-1 says the notes issued under Google’s 2023 and 2024 agreements “have been fully converted into non-voting redeemable convertible preferred stock”, and that Anthropic committed to spend at least approximately $114.5 billion with Google between April 2026 and July 2033. Alphabet’s quarterly report does not name Anthropic; it says its non-marketable equity securities under the measurement alternative “primarily consist of our investment in a private company”, without naming it.
Connecting the Coverage
Our loss piece walked through how Anthropic’s own adjusted measure turns an $80.7 billion net loss into a $2.7 billion adjusted profit. Our fundraising piece covered the $65.2 billion raised. Our S-1 piece reported the headline numbers. What is new here is the other side of the same ledger, from Amazon’s own filing.
The Structural Read
As we read it, the same $6.2 billion of principal sits on two balance sheets at about 17.5 and 15.8 times that amount, by our arithmetic, because both companies mark the notes to their estimate of what Anthropic is worth.
The accounting choices differ by side. As we read it, Anthropic’s fair value option sends every increase into its loss, while Amazon’s available-for-sale classification holds the notes’ gain in equity until conversion.
As we read it, the loop runs through the compute contract as well: Amazon’s facility opens as AWS delivers compute capacity, and Anthropic has committed at least $110.0 billion to Amazon regardless of actual usage.
Anthropic, PBC Form S-1, 26 October 2026
“Because these instruments are marked to market, increases in our enterprise valuation drive increases in this expense.”
Three Implications
FOR ANTHROPIC INVESTORS The S-1 shows the fair-value charge is set by Anthropic’s own valuation; it describes changes until the notes convert, are repaid or settled.
FOR AMAZON INVESTORS Amazon’s 10-Q reports $69.1 billion of first-half other income, primarily from Anthropic items, and $15.9 billion of related discrete tax expense.
FOR ANALYSTS The two filings value the same notes at $108.6 billion and $97.9 billion at 30 June 2026, each from its own Level 3 model.
The framework argues the capex race is a financing story, ending: “and the financial architecture is starting to invert.”
As we read it, the Amazon notes are one piece of that architecture: an investor, a supplier and a customer in the same relationship, with gains and charges moving together. The framework was published in May 2026 and does not discuss this filing.
What Is Not Established
The two valuations come from different models, and neither filing reconciles to the other. Most of Amazon’s first-half net-income gain is on the preferred stock, not on the notes still outstanding, whose gain sits in equity. The S-1 leaves the IPO price blank, and that price can set the conversion terms. Anthropic says it elected the fair value option; Amazon says it classifies the notes as available-for-sale. Alphabet’s filing gives no Anthropic-specific figures.
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At 30 June 2026, Anthropic’s S-1 carries Amazon’s convertible notes as a $108.6 billion liability against $6.2 billion of principal, while Amazon’s 10-Q carries the same notes as a $97.9 billion available-for-sale asset, with a $92.0 billion unrealized gain in equity and $62.8 billion of first-half upward adjustments on its Anthropic preferred stock in net income.
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A note on sourcing. Figures are from Anthropic, PBC’s Form S-1 filed with the SEC on 26 October 2026, Amazon.com, Inc.’s Form 10-Q for the quarter to 30 June 2026 and Alphabet Inc.’s Form 10-Q for the same quarter; differences labelled as ours are our arithmetic. Earlier reports are as covered in our pieces linked above. This is not investment or accounting advice. We did not contact Anthropic, Amazon or Alphabet.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
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