Amazon's profits are about to be held hostage by Anthropic's stock price. Millions of retirement accounts own Amazon through index funds. And this year, a huge chunk of the profit those funds are paying for came from one private company getting more expensive on paper. That company is Anthropic. And its $1.5 trillion IPO price will likely have to come down, maybe closer to $1 trillion. Amazon depends more on that number than almost anyone. In the second quarter, Amazon made $27.5 billion of operating income. Its net income was $62.6 billion. Most of that gap was Anthropic. After Anthropic's May round valued it at $965 billion, Amazon marked up its Anthropic shares by about $50.5 billion. The first quarter had already added about $16.8 billion of Anthropic gains. That's roughly $67 billion of pre-tax gains in 6 months from revaluing one stake. On June 30, Amazon carried the whole position at about $190 billion. Its first $8 billion went in between 2023 and 2024. And the money runs in a circle: In April, Amazon put another $5 billion into Anthropic, with up to $20 billion more tied to milestones. In the same deal, Anthropic agreed to spend more than $100 billion on AWS over the next 10 years. So the loop goes: Amazon invests in Anthropic -> Anthropic commits to buying Amazon's cloud -> Anthropic raises money at a higher price -> Amazon books the higher price as profit None of this is illegal. The accounting rules tell Amazon to update the value when a new funding round sets a new price. But the third quarter shows what Amazon looks like with no new round to mark: Net income fell to $20.7 billion. Free cash flow over the last 12 months came in at minus $42.4 billion, with $77.3 billion of capex in the quarter alone. And the IPO changes the game completely. Once Anthropic trades publicly, Amazon's stake gets valued off a stock price that moves every single day. That price could start moving Amazon's reported profit far more directly. Investing .com ran an illustration: If Anthropic trades at $750 billion, Amazon's stake would be worth about $42 billion less than its June value. That's about TWICE what Amazon earned in the entire third quarter. To be clear, a $1 trillion price still sits above the $965 billion Amazon marked to in May. So the real risk starts after the first trade. Alphabet is in a similar spot. It carried $124.3 billion of private company stakes on June 30, and reports say most of that is Anthropic. If Anthropic falls it takes the big guys with it.