Alphabet (GOOG -6.88%)(GOOGL -7.12%) gave investors plenty to debate in its second-quarter report this week, from 24% revenue growth to another big increase in its capital spending plans. But I’d argue the most remarkable number sat in the company’s quarterly filing with the Securities and Exchange Commission. Alphabet’s stake in rocket maker SpaceX (SPCX +2.58%) was worth about $94 billion as of June 30.
Zoom out, and the history behind that figure is extraordinary. In January 2015, Google and investment firm Fidelity together put $1 billion into SpaceX for a combined stake of just under 10%. SpaceX now carries a $1.5 trillion market value — about 150 times what the entire company was worth in that funding round.
But Alphabet can’t spend a dollar of its windfall yet. The filing shows the whole position is restricted from sale. About $80 billion of the stake sits under short-term restrictions (the standard lockup period that follows an initial public offering), and the remaining $14.1 billion is locked up through the third quarter of 2027.
Here’s a closer look at what the stake means for shareholders on both sides of it.
Image source: Getty Images.
A windfall on paper
The stake did wonders for Alphabet’s reported profit. Second-quarter net income rose 298% year over year to $112.1 billion, and earnings per share climbed 294% to $9.11.
The driver wasn’t advertising or cloud computing. It was a $99.0 billion gain on equity securities, which the company said primarily reflected unrealized gains from SpaceX and a private company (reported to be artificial intelligence (AI) developer Anthropic).
Unrealized is the key word. Alphabet didn’t collect $99 billion in cash. It marked up shares it isn’t currently allowed to sell.
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That distinction helps explain why investors mostly shrugged at the windfall and focused on spending instead. Alongside the report, Alphabet raised its capital spending guidance for 2026 to $195 billion to $205 billion, from the $180 billion to $190 billion range it set in April. Free cash flow swung to negative $5.9 billion for the quarter, down from a positive $10.1 billion in the first quarter. Also worth noting: the company raised $49.6 billion in June by selling new stock, all while sitting on $94 billion of SpaceX shares it can’t touch. After all, locked-up paper gains don’t fund data centers.
Shares of Alphabet were down about 7% Thursday afternoon as of this writing.
Of course, the stake still matters. It amounts to about 2.4% of Alphabet’s roughly $3.9 trillion market capitalization — a nice bonus for shareholders, but not the reason to own the stock.
The other side of the trade
For SpaceX shareholders, the disclosure sends two messages at once.
The first is a vote of confidence. Alphabet has held on for more than a decade, and it still owns an effective stake of about 4.9% of the company, down from about 6% before recent dilution. An investor of Alphabet’s caliber keeping a position this large is arguably part of the bull case.
The second message is about supply. SpaceX stock has had a rough public debut. Shares went public at $135 in June, peaked at $225.64, and trade at about $116 as of this writing — a decline of nearly 49% from the high.
Space Exploration Technologies
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And the restrictions on Alphabet’s stake begin easing after SpaceX delivers its first earnings report, scheduled for Aug. 4. Alphabet hasn’t said anything about selling. But an outside holder with $94 billion of stock and a spending plan of its own approaching $200 billion at least has reasons to consider it once it’s allowed.
Also, SpaceX shares have fallen since June 30, so the stake is already worth less than the filing’s mark. Paper gains move in both directions.
So what should investors do with the news? For Alphabet shareholders, I’d treat the SpaceX windfall as exactly that — a windfall. The investment case still rests on the operating business (where revenue grew 24% year over year last quarter and Google Cloud is accelerating) and on whether the company’s enormous AI spending pays off.
For anyone eyeing SpaceX stock, though, the filing is worth remembering. The company is still losing money, its market value sits near $1.5 trillion, and one outside holder alone is sitting on $94 billion of stock it will soon be free to sell. Between the two stocks, I’d rather own the shareholder than the rocket maker.
