- 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.