Amazon bought $8 billion of Anthropic convertible bonds between 2023 and 2025. By the end of Q3 2026, Amazon valued the bonds it still has at $146.2 billion. Those bonds carry an unrealized gain of $140.3 billion, which Amazon records in shareholders’ equity as accumulated other comprehensive income (AOCI). Amazon won’t record that gain in its net income until the bonds convert into stock.
That could change in the next few weeks. Anthropic made its IPO filing public earlier this week, and reports put its Nasdaq listing in mid-November. When Anthropic lists, Amazon’s bonds convert into Anthropic stock. Each time an earlier portion of the bonds converted into preferred stock, Amazon transferred the matching gain into net income. An IPO conversion would work the same way, at a much larger scale.
The IPO may not convert all of Amazon’s bonds at once, though, because the bonds can’t take Amazon’s stake above 12% of Anthropic’s fully diluted stock unless Amazon waives that limit.
How much of the gain gets through that cap will determine what Amazon’s Q4 earnings look like. Amazon could record a gain several times the operating income it earned in Q3. It could also record a fraction of the $140.3 billion now, with the rest spread across later quarters. Either way, anyone valuing Amazon on its earnings will need to separate the Anthropic gain from what Amazon’s businesses earned. I worked through the terms to find which outcome they point to and what Amazon earns once the Anthropic gains come out.