Alphabet Just Posted a Jaw-Dropping $112 Billion Profit. Here's the Catch.

A large chunk of Alphabet's record-setting quarter was due to a SpaceX investment.

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is one of the world's largest companies, and it posted one of the most profitable quarters in history. It delivered an incredible $112 billion in net income. However, that comes with a big asterisk.

In Q2, Alphabet generated $120 billion in revenue. It's nearly impossible for a company to turn almost a 100% profit margin, and that's exactly the case here. So, what's the catch with Alphabet's most profitable quarter ever?

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Alphabet was an early investor in Space Exploration Technologies , more commonly known as SpaceX. This was obviously a massive success story and made Alphabet a ton of money when it went public. However, under accounting rules, Alphabet must report any investment gains as net income, even if it didn't sell. As of June 30, Alphabet's SpaceX position totaled $94.1 billion. That accounted for a majority of its net gain on securities of $99 billion for the quarter, but not all of it.

This will cut both ways, as Alphabet's net income will take a hit when SpaceX's stock declines. Since June 30, when Alphabet's Q2 ended, SpaceX's stock has declined by over 30%. If SpaceX's stock remains depressed throughout Q3, Alphabet's net income in Q3 will be negatively impacted.

So, just because Alphabet posted one of the most profitable quarters for any company, ever, doesn't mean that it's all sustainable. However, don't write all of Alphabet's quarter off as just a one-time boost from SpaceX.

Instead, investors should also look at Alphabet's operating income, which excludes investment gains. If you solely look at that, Alphabet's operating income rose an impressive 30%, one of its better quarters over the past three years.