The narrative coming out of Q1 2026 earnings season is that Big Tech is crushing it—25% year-over-year EPS growth, record-breaking profits, the whole nine yards. Wall Street analysts are falling over themselves to raise price targets. But here's what they're not telling you: a huge chunk of those "profits" isn't real revenue. It's accounting magic.

Let me explain the shell game. Amazon and Google have been pumping billions into AI startups like Anthropic and OpenAI. Those investments show up on their balance sheets, and when the paper value of those companies goes up, Big Tech gets to book it as "other income." Sounds great, right?

Here's the catch: According to the Financial Times, those same AI companies are turning around and spending that investment money right back on cloud computing services from—you guessed it—Amazon Web Services, Google Cloud, and Microsoft Azure.

It's a circular money flow. Big Tech invests in AI startups, records paper gains when those startups get revalued, and then collects the cash back when the startups buy cloud services. According to reporting from The Information, OpenAI and Anthropic now make up roughly half of the entire cloud computing order books at Oracle, Alphabet, Amazon, and Microsoft.

Let that sink in. Half.

When you strip out this "other income"—the paper gains from AI investments—that impressive 25% EPS growth drops back down to high-single-digit to low-teens growth. Still decent, but nowhere near the "record-breaking" headlines would have you believe.

So what does this mean for you? If you own Big Tech stocks directly or through index funds, you need to understand what you're actually buying. This isn't sustainable revenue growth from selling more products or services to real customers. It's financial engineering dressed up as innovation.