Google burning through cash with spiralling AI costs

10 hours ago

Google's parent company Alphabet reported negative free cash flow of $5.9 billion for the first time in at least a decade, driven by high AI infrastructure spending.
Alphabet's AI-related capital expenditures are expected to reach up to $205 billion this year, up from $190 billion, with $45 billion spent in Q2, 60% on servers and 40% on data centers.
Despite quarterly revenue of $119.8 billion (up 23% year-over-year), Alphabet's stock fell 4% in after-hours trading, reflecting investor concerns over spending levels.
Google CFO Anat Ashkanazi stated that AI demand still outpaces investment, and the company will continue investing as long as opportunities exist.
CEO Sundar Pichai described the AI shift as still early stages with potential for extraordinary returns, while maintaining disciplined financial planning.
Tesla also reported negative free cash flow of $1.1 billion for Q2 due to rising investment costs, with expected spending of up to $25 billion this year, more than double 2025's capital spending.
Tesla's stock dropped 4% in after-hours trading, similar to Alphabet, as both companies face investor scrutiny over high spending on AI and technology infrastructure.

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