Peter Smith
In a recent viral post on X, investor Meet Kevin questioned Amazon's latest earnings report. While the company posted a 35% EPS increase, the real driver wasn't retail or cloud performance—it was a paper gain from its Anthropic investment. Without that gain, EPS would've dropped 8.5%, showing no real operational growth.
The tweet resonated with analysts and investors as stock charts circulated online. The pattern was clear: after a post-earnings pop, Amazon hit resistance near $190 and retreated. This rally-then-reversal reflected market skepticism once traders understood what drove the numbers.
What's Behind the Headline Numbers
Amazon's Q3 2025 earnings beat expectations with revenue at $180 billion (up 12%) and EPS at $1.95. But as Meet Kevin pointed out, that figure included a $9.5 billion pre-tax gain from revaluing its Anthropic stake after the AI startup raised capital at a higher valuation.
This wasn't cash from operations—just an accounting adjustment. Strip it out, and earnings would've been flat or negative.
Chart Analysis: What the Market Is Telling Us
The chart shows Amazon jumping after earnings, then quickly losing steam. The stock failed to break $190 resistance and fell back toward $175–$178 support with rising selling volume. This failed breakout suggests institutional traders didn't view the results as sustainable.
Anthropic: Strategic Partner or Accounting Boost?
Amazon's investment in Anthropic—creator of the Claude AI model—has strategic value. Anthropic uses AWS infrastructure and Amazon's Trainium2 chips, strengthening Amazon's position against Microsoft and Google in AI. But short-term, the $9.5 billion gain is purely valuation-based. It generates no cash flow and could reverse if Anthropic's valuation drops.
The Broader Financial Context
AWS remains Amazon's profit engine with $33 billion in revenue and 20% growth. But AI investments are costly: capital expenditures exceeded $50 billion while free cash flow fell to $15 billion. The market's cautious reaction makes sense—near-term profitability depends on accounting adjustments, not organic growth
Peter Smith
