TECH

RMIT white paper identifies gap In Australia’s anti-scam architecture

Scam losses in Australia remain above $2 billion annually, and despite a range of government-led measures introduced in recent years, scams continue to take a toll on individuals across the country, particularly those in vulnerable communities.

A new white paper from RMIT University argues that a gap persists in the national anti-scam framework – one that sits at the very moment a victim is about to hand over funds, but before those funds have been irreversibly transferred.

A window between prevention and response...The paper, Completing Australia’s anti-scam architecture, was authored by RMIT’s Associate Deputy Vice-Chancellor of Strategy, International and Engagement in the College of Business and Law, Professor Mathews Nkhoma, in partnership with community finance organisation, Good Shepherd.

It contends that while Australia’s scam defences have improved, the current architecture is weighted toward two ends of the scam lifecycle: preventing initial contact with potential victims and responding after losses have already occurred. Between those two stages, the paper argues, lies a less formally recognised window where targeted intervention could stop funds from leaving a victim’s hands.

Professor Nkhoma describes this window as the “pre-transaction stage” – the period when a person, under pressure or deception, is seeking access to funds but has not yet sent them.

“The national anti-scam system is currently at its strongest either before contact is made or after loss has occurred,” he explained. “Between these points lies a stage that is less formally recognised – the pre-transaction stage – when a victim of fraud and under pressure or deception, seeks access to funds.”

“This is the point at which behavioural intervention can prevent a scam from progressing and funds have not yet been irreversibly transferred.”

A missing layer in the framework...The white paper’s central argument is that despite its importance, this pre-transaction stage has not been formally recognised as a distinct intervention layer within the national anti-scam architecture.

That means the current system lacks a structured mechanism for intervening at the point where deception meets financial decision-making – a moment the paper frames as one where behavioural intervention could still change the outcome.

“Despite its significance, the pre-transaction stage is not formally recognised as a distinct intervention layer within the national anti-scam architecture,” Professor Nkhoma noted.

The implication, as the paper lays it out, is that victims who have been psychologically manipulated but have not yet completed a transfer are passing through a stage where no formal intervention pathway exists to reach them.

Using existing infrastructure...Rather than calling for a new institution to fill this gap, the white paper proposes that a pre-transaction intervention strategy could be delivered through services that already exist within the community finance sector.

“A proposed pre-transaction stage strategy would operate through existing service infrastructure rather than requiring a new institution, with the purpose of interrupting scam-related harm at the moment when deception intersects with financial decision-making,” Professor Nkhoma outlined.

Community finance services, the paper argues, already sit at the point where individuals make financial decisions and could serve as a practical layer for this type of intervention. These services interact with people at moments of financial need or vulnerability, positioning them to identify warning signs that a transaction may be scam-related.

“Community finance services operate precisely at this point of decision,” he added. “A staged pilot would test and refine this intervention layer, assessing its effectiveness, safeguards and integration within the broader anti-scam framework.”

A staged pilot approach...The white paper recommends a staged pilot program to test the proposed intervention model before any broader rollout. The pilot would focus on evaluating the effectiveness of pre-transaction intervention, determining what safeguards are needed and assessing how the approach could be integrated within Australia’s existing anti-scam framework.

The intent, the paper argues, is not to replace any part of the current system but to complete it – adding a formally recognised layer at the stage where losses can still be prevented.

Professor Nkhoma has held his current role at RMIT since 2021, overseeing strategy, international and engagement initiatives within the College of Business and Law.

The gap in Australia’s anti-scam architecture...Australia's national response to scams has strengthened in recent years through government-led anti-scam measures. Yet losses remain above $2 billion, and scams continue to have a significant and devastating impact on individuals, particularly those in vulnerable communities. In a new white paper, RMIT professor Mathews Nkhoma has identified the critical gap in anti-scam architecture before funds have been irreversibly transferred. 

Professor Mathews Nkhoma, Associate Deputy Vice Chancellor Strategy International & Engagement, College of Business and Law: 

"The national anti-scam system is currently at its strongest either before contact is made or after loss has occurred. Between these points lies a stage that is less formally recognised - the pre-transaction stage - when a victim of fraud and under pressure or deception, seeks access to funds. 

"This is the point at which behavioural intervention can prevent a scam from progressing and funds have not yet been irreversibly transferred. 

"Despite its significance, the pre-transaction stage is not formally recognised as a distinct intervention layer within the national anti-scam architecture.  

"A proposed pre-transaction stage strategy would operate through existing service infrastructure rather than requiring a new institution, with the purpose of interrupting scam-related harm at the moment when deception intersects with financial decision-making.  

"Community finance services operate precisely at this point of decision. A staged pilot would test and refine this intervention layer, assessing its effectiveness, safeguards and integration within the broader anti-scam framework." 

Professor Mathews Nkhoma has authored a white paper Completing Australia’s anti-scam architecture in partnership with Good Shepherd. 

RMIT University

 

TECH

Dell releases new 15-inch laptop internationally with AMD Ryzen processors and up to 32 GB RAM

Dell has released a new 15-inch laptop internationally featuring AMD Ryzen 200 processors. Also equipped with a 400-nit display and up to 32 GB of RAM, the Dell 15 D15266 contains upgradeable RAM and storage within a housing that weighs just over 1.5 kg.

Dell continues to expand its budget laptop division with new models. Yesterday, we reported that the company had released a new 14-inch laptop in the form of the Dell 14 D14261 to rival the MacBook Neo. Simultaneously, the company began selling a 15.3-inch alternative with the same Intel Wildcat Lake processors.

As it turns out, Dell also launched the Dell 14 D14265 in Oceania and Southeast Asia. Additionally, the company has complemented this 14-inch laptop with a 15.3-inch alternative. Mirroring its 14-inch counterpart, the Dell 15 D15266 is only available in selected markets. However, Dell's website indicates that the 15.3-inch laptop will eventually launch elsewhere, including in the US.

Dell Technologies announced on August 18 four new models in its standard notebook PC lineup, the "Dell 14" and "Dell 15" series, with sales beginning sequentially. Designed for everyday use, the laptops feature 14-inch and 15.6-inch LCD displays and adopt a plastic chassis that is lighter than previous models.

The four configurations announced include the 14-inch "D14261" and 15.6-inch "D15261" powered by Intel's Core 3 304, and the 14-inch "D14265" and 15.6-inch "D15266" powered by AMD's Ryzen 3 210. The Core 3 304 operates with 5 cores at up to 4.3GHz, while the Ryzen 3 210 features 4 cores and 8 threads running at up to 4.7GHz.

All models come standard with 8GB of memory and a 512GB SSD, running Windows 11 Home. Pricing starts at ¥135,900 (approximately $850) for the D14261, ¥146,900 (approximately $920) for the D15261, and ¥129,900 (approximately $810) for the D14265 (all prices include tax). The D15266 is listed with a release date of "September 0," which is clearly a typographical error, and the actual release timing has not been disclosed.

All models feature displays supporting 1920×1200 pixel resolution with a 16:10 aspect ratio, providing a generous workspace. Despite being standard models, they offer sufficient performance for everyday tasks such as video streaming, document creation, and online meetings.

Higher-end model launched simultaneously...Dell is also introducing a new configuration of its higher-performance 13.4-inch "XPS 13" laptop around the same time. This model is powered by Intel's Core Ultra 7 355 processor, with LPDDR5X memory options of 16GB or 32GB and storage choices of 512GB or 1TB SSD, offering a total of four combinations.

The XPS 13 features a 13.4-inch touchscreen display with 2560×1600 pixel resolution, a refresh rate of 30–120Hz, and 500 nits of brightness. It covers 100% of the DCI-P3 color gamut and supports VESA DisplayHDR 400 and Dolby Vision. Weighing approximately 1kg with a thickness of 12.7mm, it is lighter than the 13-inch MacBook Air M5 at 1.23kg.

The battery capacity is 52Wh, and a 65W USB-C GaN slim AC adapter is included. Cooling employs a dual-fan design, and the laptop is equipped with 8W quad speakers (Dolby Atmos compatible), a 2MP full HD infrared camera, and two Thunderbolt 4-compatible USB-C ports.

Product strategy and market impact...This new product launch is seen as part of Dell's broader effort to refresh its product lineup across a wide price range, from entry-level to premium. The "Dell 14" and "Dell 15" series, priced between ¥120,000 and ¥150,000 (approximately $750–$940), aim to capture replacement demand from students, general households, and business users.

Meanwhile, the XPS 13 configuration with the Core Ultra 7 355 is being sold first in the Chinese market, with rollout timing for other markets yet to be determined. In the Japanese market, Dell appears to be starting with standard models and gradually expanding its lineup.

As manufacturers focus on AI-capable PCs and high-performance laptops, Dell is simultaneously strengthening its affordable lineup to reach a broader user base. Particularly in the Japanese market, where PC prices have been trending upward amid the weak yen, a 14-inch laptop starting in the ¥120,000 range (approximately $750) is expected to hold a certain level of competitiveness.

The confusion regarding the D15266 release date is likely a typographical error in the press release, and further information from Dell on the official release date is awaited.

mundophone

TECH

Christine Lagarde calls for reforms regarding artificial intelligence in the European economy

Europe is facing an erosion of the conditions that historically drove the continent’s growth, its top central banker warned Wednesday, as she called on leaders not to repeat mistakes made during the dotcom boom in the age of AI.

Speaking at the World Economic Forum’s International Business Council in Geneva, Switzerland, on Wednesday, European Central Bank President Christine Lagarde warned that the continent’s post-war growth model is “eroding” and “unlikely to return to the form we once knew.”

This economic growth, Lagarde told an audience, rested on three pillars: expanding global trade, manufacturing supported by access to cheap energy, and “a stable, rules-based global order, underpinned by a U.S. security umbrella.”

All three of those pillars are weakening today, Lagarde said.

Last year alone, she said, more than 2,500 trade restrictions were implemented globally.

Shortly after his return to the White House, President Donald Trump unveiled a raft of targeted tariffs, including a 20% baseline levy on goods imported to the U.S. from the European Union. That tariff rate was later reduced to 15% when the two sides agreed on a trade deal, but uncertainty remains about the stability of that agreement and how imports of certain European goods, such as steel, will be taxed by Washington.

Integrating artificial intelligence into the European economy requires the urgent removal of bureaucratic and financial hurdles to avoid falling structurally behind the United States and China in technology. This assessment was presented by Christine Lagarde, President of the European Central Bank, during a meeting of the International Business Council at the World Economic Forum in Geneva. The head of the monetary authority stated that the European Union cannot afford to miss out on the second digital wave.

Her remarks coincided with a period of downward pressure on European stock markets, with the Stoxx Europe 600 index falling to two-week lows amid rising oil prices and increasing government bond yields. This financial climate underscores the urgent need for productivity gains within the bloc.

The risk of repeating the continent's technological lag...The European Union risks losing structural competitiveness if it fails to address the shortcomings observed during the first wave of information technology. Christine Lagarde noted that the commercial gains from the previous digital revolution were disproportionately captured outside the bloc. The post-war model—built on open trade, industrial goods powered by cheap energy, and geopolitical stability—has lost its effectiveness in the face of new international tensions.

Data presented by the ECB reveal that over 2,500 trade restrictions came into effect globally last year. Meanwhile, Chinese industry competes directly with 40% of the sectors in which Europe holds a comparative advantage—up from 25% at the turn of the century. Electricity costs for energy-intensive European industries remain double those in the United States and 50% higher than in China.

European tech companies in the expansion phase raise only half the capital secured by their North American counterparts and face significant barriers to growth. European Union companies raise 50% less capital than their San Francisco-based counterparts by their tenth year of operation. This funding gap leads 12% of European growth-stage companies to relocate to jurisdictions outside the continent, with the United States being the primary destination.

Financial market fragmentation prevents European private savings from funding large-scale technology projects within the continent. To stem the loss of intellectual property and talent, the ECB presidency has advocated for an "EU Inc." legal entity, which would allow for a single corporate registration across the European Union. The measure aims to create the conditions for companies to be founded and scale up within the European space.

Regulatory fragmentation among the 27 Member States stifles the spillover effects of private investment and restricts technology diffusion. An ECB study indicates that a 1-percentage-point increase in the number of domestic competitors investing in digital technology drives a 0.6-percentage-point increase in a firm's own investment. However, these competitive pressures hit national borders and do not propagate to the rest of the European market.

The European Central Bank’s SAFE survey indicates that euro area companies plan to allocate an average of 9% of their total investment to artificial intelligence within the European economy by 2026. Adoption rates are accelerating, though they remain constrained by energy costs and a shortage of technical talent. The bloc's economic activity recorded 0.4% quarterly growth in the second quarter of 2026, supported by domestic demand and employment.

The political timeline for capital integration...Realizing the Capital Markets Union by the end of 2026 is the decisive step toward retaining high-value investments on the continent. The full deployment of artificial intelligence across the European economy and Single Market requires eliminating stock market fragmentation and fostering banking consolidation among Member States. Christine Lagarde summarized the policy priority for business leaders in Geneva:

“Europe cannot afford to repeat that experience with artificial intelligence—the second digital revolution. We must create the conditions for technology to thrive here and for European companies to grow here.”

The ability to sustain the European Union’s long-term competitiveness depends on the speed at which these structural reforms are adopted. Aligning EU financial policies and simplifying corporate frameworks will determine the role of artificial intelligence in the European economy as a source of wealth and industrial sovereignty.

mundophone

TECH

Fairphone 6 turns into a Linux phone running Fedora 44 with working cameras

A developer has managed to boot Fedora 44 on the Fairphone 6, bringing a desktop-oriented Linux distribution to a smartphone already available with Android-based /e/OS. The latest demonstration confirms all three cameras are fully operational.

The main upgrades to the Fairphone 6 Plus are internal: the phone now features 12 GB of RAM—a 50% increase over the base model's 8 GB—and is equipped with the Snapdragon 7s Gen 4 processor, which is slightly more powerful than the 7s Gen 3 found in its standard sibling.

Additionally, the lineup has gained a new color option, Cobalt Blue (dark blue), joining the existing Forest Green (dark green) and Horizon Black (black); the Cloud White option appears to be exclusive to the standard Fairphone 6.

The rest of the specifications remain unchanged, maintaining a robust configuration for a premium mid-range smartphone. The device features a 6.31-inch LTPO OLED display with a resolution of 2484 x 1116 pixels, a refresh rate of up to 120 Hz, and Gorilla Glass 7i protection, along with a 4,415 mAh battery supporting 30W fast charging.

The camera setup includes a 50 MP Sony LYTIA 700C main sensor with optical image stabilization, accompanied by a 13 MP ultrawide lens and a 32 MP front-facing camera. On the software front, the phone ships with Android 16, an upgrade from the Android 15 found on the older model.

The manufacturer's commitment to longevity is a key strength: six major operating system updates are guaranteed, along with ongoing security patches extending until 2032 or 2033—the website mentions both dates, making the exact cutoff unclear, though both timeframes are impressive.

Getting desktop-class Linux to run on mobile hardware is notoriously difficult, but developer Nick on X has managed to pull it off on the modular Fairphone 6, giving us our first look at Fedora 44 running on an Android device. 

In a hands-on video, the phone is shown running a touch-friendly GNOME interface running smoothly, without any noticeable lag. Scrolling through the Settings pane displays options for wi-fi, network, multitasking, appearance and even sections for mouse & touchpad, keyboard, color management, printers etc. just like you would see on a desktop. Swiping down from the top bar smoothly pulls up the calendar widget alongside the quick-settings shade, where toggles for Wi-Fi, Night Light, Dark Style, Tiling, and display brightness are all fully interactive. Heading into the system's "About" page verifies the build as Fedora Linux 44 (Forty Four) under the host name fedora, with the system accurately detecting 7.1 GB of RAM and 251.5GB of internal storage.

Because it is an early port, there are still a few issues. As shown at the end of the video, tapping the Trash icon on the bottom dock brings up an error message saying "Failed to launch 'Trash': Failed to find default application for content type 'inode/directory', which simply shows that default file manager shortcuts aren't properly linked yet.

A follow-up demo shows the camera app opening smoothly and switching seamlessly between the main, ultra-wide, and front lenses without a single crash.

The Fairphone 6+ recently made its global debut alongside an official launch in the US. It retains almost the same hardware and design as the standard Fairphone 6, differing only under the hood with an upgraded Snapdragon 7s Gen 4 processor and 12GB of RAM compared to the regular Fairphone 6 which features Snapdragon 7s Gen 3 and 8GB RAM configuration.

mundophone

TECH

When zombie credit cards attack: UMass researchers discover loophole that can ranimate expired cards

A new security loophole can bring some expired credit cards back to life, researchers from the University of Massachusetts Amherst have discovered. If stolen, these “zombie credit cards” could leave cardholders vulnerable to fraudulent charges, according to the new study, presented at the conference USENIX Security 2026.

The researchers discovered that thieves “can still use the victim’s expired credit card, despite the victim receiving another card,” says Taqi Raza, assistant professor in the Riccio College of Engineering at UMass Amherst.

This loophole exists because credit card accounts do not expire with the physical card. For instance, if you make a return, your account will be refunded, even if the purchasing credit card has expired. But this made Raza wonder: “If the card can get a refund, can the card make a payment?”

For some credit cards, the answer is yes. Raza and his research team devised a system using two, off-the-shelf smartphones and basic emulator software to fool an in-store card reader, also known as a point-of-sale (POS) terminal, into thinking a card was active.

Using the same technology that enables tap-to-pay transactions (near-field communications, or NFC), the first phone is used to activate the credit card. It tells the card: a purchase is trying to be made, so send over the cardholder data and payment application. This includes the past-due expiration date.

However, using a “man-in-the-middle” Wi-Fi-based relay system, the second phone takes the credit card information but rewrites the expiration date. Raja Hasnain Anwar, the lead author of the study and doctoral candidate with the Khwarizmi Lab at UMass Amherst, notes that this attack is particularly dangerous because thieves do not need to determine the actual expiration date of a replacement card; any arbitrary expiration date in the future is sufficient to successfully make a charge.

“The expiration date printed and stored on the card is the only way for the POS to know whether the card is active or expired,” he says. “Yet it is not cryptographically protected. So we can easily modify it to fool the POS.”

This second phone is then tapped to the card reader. To an outside observer, the behavior would look the same as using any kind of digital wallet.

“Now, you’re expecting the bank should notice it,” says Raza. But not all banks verify the terminal-read expiration date against authenticated data. If other security measures are not in place to recheck card lifecycle status, the fraudulent transaction will be successful.

''The expiration date printed and stored on the card is the only way for the POS to know whether the card is active or expired, yet it is not cryptographically protected. So we can easily modify it to fool the POS''... Raja Hasnain Anwar, doctoral candidate with the Khwarizmi Lab at UMass Amherst and lead author of the new study.

Image

The loophole that enables an expired credit card to be revived is based on a relay system using software that can be run on two standard smartphones and the physical card. The researchers found it worked across a variety of point-of-sale terminals(image above)

In fact, credit cards have another expiration date in addition to the one printed on your card: a date embedded in the security key that encrypts the transaction between the card and the bank, referred to as a digital certificate. This digital certificate is checked first, enabling the card to “talk” to the POS.

“What we found is that the expiry date for the digital certificate for the security key is longer than the expiry date of return on the card,” says Raza, making this date an ineffective check of the card’s actual expiration status.

The researchers demonstrated that this loophole works both in the lab and in the wild—at local dining facilities and grocery stores. However, not all credit cards were equally impacted by this loophole and digital wallets included additional security measures making them more resilient against this particular kind of attack. However, separate research from Raza’s lab has found digital wallets are susceptible to other types of exploitation.

The root cause of such issues lies in how payment cards and systems have evolved over time. As we move to smarter but distributed systems, decisions are divided between the card chip, POS terminal, payment networks (e.g., VISA, Mastercard), and the bank. Discrepancies often arise, such as the ability to fool a terminal with a limited view of card expiration when the bank relies on that terminal’s verification. “With the rise of AI, it is becoming increasingly easy for attackers to spot these discrepancies and devise exploits, effectively putting millions of credit cards at risk,” says Anwar.

While the major card companies have been notified of their discovery, Raza says consumers should still abide by safe credit card practices.

“The attack exploits a documented misconception—expired cards are widely assumed inert, so cardholders discard them carelessly,” says Raza. “Always discard your expired card, no matter what. Even if you permanently close your credit card, still monitor the transaction on the closed account.”

Start by demagnetizing the card by slowly running a magnet along the magnetic strip. Next, destroy the embedded chip either with a hammer or scissors. Cut apart your card or put it through a paper shredder, ensuring you cut through any raised letters or numbers. Finally, separate the credit card pieces into different trash cans. For metal cards, contact your company’s customer service department. Fraudulent charges should be immediately reported to your bank.

University of Massachusetts Amherst

TECH

Data centers grow with AI, but energy and water consumption raise alarms

Data centers are proliferating rapidly across the United States, Europe, and other regions of the globe. These massive facilities are essential for digital services and, crucially, for the new artificial intelligence race. However, their growth comes at a high cost: increased electricity usage, vast water consumption, and direct impacts on the cities hosting these structures.

Emmanuel Ferrario, a columnist for *Infobae en Vivo*, explained that data centers do more than just determine how we store and process information; they will also play a pivotal role in the development of AI and, consequently, in the daily lives of millions of people.

According to Ferrario, these facilities function like true digital factories. They house the computers, servers, storage systems, and massive networks responsible for storing and processing virtually everything that occurs in our connected world.

Furthermore, they provide the necessary infrastructure to train and run the artificial intelligence models that are gaining ground across various economic sectors.

Resistance to data centers is mounting...Despite their technological importance, building new data centers is becoming increasingly difficult.

Ferrario notes that this resistance is growing primarily in the United States and Europe. Key concerns include electricity consumption, water usage, noise from the facilities, and the generation of electronic waste.

The United States already hosts around 5,500 data centers and had planned to add nearly 4,000 more over the next three years. However, according to the columnist, the actual pace of construction is falling well short of expectations.

Currently, only about 40% of the capacity needed to meet expansion plans is reportedly under construction.

This slowdown stems from various causes, including a shortage of skilled labor, difficulties in sourcing chips, limitations in electrical infrastructure, and—increasingly—opposition from local communities.

A study cited by Ferrario highlighted the scale of this resistance. Only 23% of respondents in the United States viewed the expansion of these facilities positively, while 48% held a negative view. More than 60% also opposed having a data center located in their own city.

Energy and water have become critical issues...Resource consumption lies at the heart of the debate.

According to Ferrario, a mid-sized data center can consume a daily amount of water and electricity comparable to that used by a city of 30,000 to 50,000 inhabitants.

The issue becomes even more sensitive when governments or utility companies offer incentives to attract these facilities.

The columnist notes that part of this cost may end up being passed on to other consumers in the region. This fuels resistance among residents who fear paying higher prices for the energy required to power large-scale tech operations.

Water presents another major challenge. Many data centers require massive cooling systems to prevent servers from overheating.

Some countries are already attempting to curb this waste. In Germany, for instance, initiatives are underway to capture some of the heat generated by data centers and repurpose it for urban heating systems.

Public pressure is also mounting on authorities.

Ferrario highlighted that several U.S. states have adopted restrictions or begun discussing limits on new facilities. In some regions, local governments are even considering moratoriums to temporarily halt new construction or expansions.

The situation varies significantly across Europe.

Countries with abundant energy supplies may adopt a more flexible approach; France, for example, boasts extensive nuclear infrastructure. Other European governments, however, impose stricter environmental requirements before greenlighting new projects.

This disparity demonstrates that the race for data centers hinges on more than just technology. Energy availability, electrical infrastructure, water resources, and public acceptance have also become strategic factors.

AI is also turning data into a matter of sovereignty...There is yet another concern: who controls all this infrastructure. Concentrating vast amounts of information in a few data centers raises questions regarding digital sovereignty, security, and control over sensitive data.

At the same time, the phenomenon known as NIMBY—short for "not in my backyard"—is on the rise. The term describes people who acknowledge the need for certain infrastructure but do not want its impacts near where they live.

According to Ferrario, something similar is already happening with data centers.

Growth seems inevitable, but it will come at a price...The expansion of artificial intelligence will likely require even more computing power in the coming years. This means new servers, larger facilities, and a growing demand for electricity and cooling systems.

As a result, the conversation is shifting. The question is no longer simply whether or not to build data centers, but how to expand this infrastructure without offloading its environmental and economic costs onto communities.

Governments are exploring various approaches, ranging from strict restrictions to economic incentives and environmental mandates.

Artificial intelligence may be at the heart of the next major technological transformation. Yet, behind the seemingly invisible algorithms lies a deeply physical infrastructure—one that requires vast amounts of energy, water, and space to keep running.

mundophone

TECH

Big Tech and potential stock market vulnerability

Tech giants like Amazon and Alphabet have driven the stock market to record highs in recent years, fueled by the growth of their artificial intelligence and cloud computing businesses. However, in recent months, a significant portion of these two companies' profits has come from an unusual source: the appreciation of their equity stakes in artificial intelligence companies.

More than 70% of Alphabet's quarterly net income came from investments in other companies—specifically Elon Musk's SpaceX—according to a recent regulatory filing and an analysis by Satori Insights, a financial market research firm. SpaceX went public in June in the largest initial public offering (IPO) in history.

Investment gains also accounted for about 65% of Amazon's net income, largely stemming from its stake in Anthropic, a leading artificial intelligence startup that also plans to go public.

These gains highlight a growing vulnerability in the stock market as a whole: the companies continuing to drive the market upward are increasingly dependent on each other's success.

"It’s circular," said Matt King, founder of Satori Insights. "What is funding artificial intelligence is, increasingly, artificial intelligence itself."

Concerns regarding the circular nature of the AI ​​boom have persisted for some time as investors watch dominant tech giants, chipmakers, and AI labs invest in or lend money to one another.

This money is often used to purchase cloud computing products or services from the very companies providing the funding.

Executives in the AI ​​sector have defended these circular funding models. Sam Altman, CEO of OpenAI, described the deals as a creative way to unlock the capital needed to accelerate innovation during a time of rapid transformation. But the investment gains recorded by Alphabet and Amazon show how the financial performance of these companies is increasingly intertwined. They also point to the growing interconnection between the stock market and the broader economy: artificial intelligence is driving growth in both, making the threat of a sharp stock market drop an even greater concern for economic policymakers.

"The stock market has never been merely a reflection of the economy, but it has now become one of the economy's main engines," said King.

Unrealized investment gains are factored into a company's profit based on the value of its holdings at the end of each quarter. Unless the company sells any of these holdings, the gains exist only on paper.

The mechanism works in reverse as well: a drop in the value of investments during a quarter can reduce the profits reported by the company.

Alphabet and Amazon did not respond to requests for comment.

They are part of a small group of technology companies closely watched by the market—dubbed the "Magnificent Seven"—which also includes Microsoft, Meta, Apple, Tesla, and Nvidia. The group has become a benchmark for the tech-driven stock market rally, and many investors prefer to analyze the seven companies collectively.

In total, the Magnificent Seven recorded $315.6 billion in net income for the second quarter. This period corresponds to the three months ending in June for all the companies, except Nvidia, which follows a slightly different fiscal year.

Of that total, $134.6 billion—or about 42%—came from investment gains, according to calculations by King, who adjusted the figures reported by the companies to account for taxes. The other sources of net income are typically revenues from the sale of products and services.

Without these investment gains, the group's profits would have remained roughly at the same level as the previous quarter—meaning they would not have grown—according to King. Microsoft, Meta, Apple, and Tesla did not record comparable revenue from investments.

Nvidia recorded approximately $13 billion in investment gains in the most recent quarter. The chipmaker holds stakes in OpenAI and Anthropic, as well as investments in other artificial intelligence-related companies—including CoreWeave and Applied Digital—that lease access to data centers equipped with high-capacity processors for AI model development.

Investment gains for the seven companies in the second quarter accounted for a much larger share of total profits than the 5% recorded in the previous quarter, according to King's calculations.

Going forward, investment gains from these tech companies' holdings may continue to fluctuate as some of the private companies they invest in go public.

The gains announced by Alphabet, Google's parent company, appear to be largely attributable to its investment in SpaceX, Elon Musk's space exploration and artificial intelligence company. The company recorded nearly $80 billion in pre-tax profit from investments in restricted equity securities and reported holding $94.1 billion in SpaceX shares.

mundophone