I’m Buying This Hyperscaler On Repeat Before The Anthropic IPO
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
I have added to my Amazon (NASDAQ:AMZN | AMZN Price Prediction) position after every earnings report this year, and July gave me another reason to keep going. I own the company that rents computing power to Anthropic, and Amazon also holds a large ownership stake in Anthropic itself.
Why Amazon’s Anthropic Exposure Stands Out
Amazon makes money from Anthropic in two ways. First, it collects rent: Anthropic agreed to secure up to 5 GW of current and future Trainium chips on AWS. Second, its stake keeps rising in value. Amazon booked a $9.5 billion pre-tax Anthropic gain in Q3 2025, $16.8 billion in Q1 2026 and $53.4 billion in Q2 2026. An IPO would put a public market price on that stake.
Three Numbers Behind Amazon’s Momentum
First, AWS is growing faster again. Revenue reached $42.2 billion, up 36.7%. That was its fastest growth in 18 quarters and the fifth straight quarter of faster growth. The AWS backlog stands at $496 billion, growing triple digits, and the unit ran a 39.4% operating margin.
Second, Amazon designs its own chips. Its AI and Chips businesses each passed $25 billion annualized run rates, growing triple digits. Bedrock customers spent more in Q2 than in all prior quarters combined, and 98% of Amazon’s top 1,000 EC2 customers use Graviton.
Third, the rest of Amazon pays for the expansion. Revenue rose 19.6% to $200.61 billion. Operating income climbed 43.2%, and operating cash flow rose 39.6% to $45.39 billion. Interest coverage is 35.17x.
How Amazon Stacks Up Against Microsoft and Alphabet
Microsoft (NASDAQ:MSFT) is the obvious alternative, and Azure grew 43% last quarter. Its Anthropic upside looks small next to Amazon’s. Microsoft recorded a $3.20 billion Anthropic gain in its June quarter, while Amazon booked $53.4 billion. Microsoft’s AI story runs mainly through OpenAI.
Alphabet (NASDAQ:GOOGL) grew Google Cloud 82%, faster than AWS. Alphabet also raised $49.6 billion in net equity proceeds, which dilutes existing shareholders, and suspended its buyback. Its Gemini models compete directly with Anthropic’s Claude. Anthropic’s IPO helps a competitor of Alphabet’s, while for Amazon it sets a price on an asset it already has.
Risk I Watch Every Quarter
Spending is the real danger. Amazon spent $54.21 billion on capex in one quarter, up 68.4%, and plans about $200 billion for 2026. Trailing free cash flow turned negative at -$7.6 billion, and long-term debt reached $119.1 billion from $65.6 billion. The Anthropic gain raised GAAP EPS to $5.75, while comparable EPS was about $1.88. Amazon also pays no dividend, so I earn nothing while I wait.
The risk is manageable since customers have already committed to much of this capacity. Management says servers break even in a little less than three years, and most AI capacity is contracted for at least five-year terms. Customers have already reserved most of Amazon’s 2027 capacity, and the power, cooling, and networking suppliers behind that expansion are a story of their own (we covered seven of them in a free AI infrastructure report).
What Could Drive Amazon From Here
Amazon’s chief executive said AWS could “very possibly be a trillion dollar annual revenue business for us in time.” Q3 operating income guidance of $22.5 billion to $26.5 billion compares with $17.4 billion a year earlier. The stock has returned 493.33% over ten years and is up just 7.54% this year. In my view, the market has not yet priced in the Anthropic stake or the chip business.
When Anthropic finally lists, I want to already own the company that supplied its computing power and kept a piece of the upside.
Contact [email protected] for any questions or corrections.
Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
