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Alphabet free cash flow turns negative as AI spending accelerates
Alphabet reported free cash flow of negative $5.9 billion in the first quarter as AI related capex pushed spending higher, while the company projects AI investment could reach $205 billion this year.
Google parent Alphabet reported its free cash flow turned negative for the first time in at least a decade, as surging artificial intelligence infrastructure spending outpaced available cash. BBC Business said Alphabet posted negative free cash flow of $5.9 billion for the first time in at least ten years, tied to rising capital expenditures largely related to AI.
The outlet reported Alphabet expects its AI spending to climb to as much as $205 billion this year, up from an earlier outlook of as much as $190 billion. Alphabet also said its combined quarterly revenue rose to $119.8 billion, up 23% year over year.
Alphabet’s CFO, Anat Ashkanazi, said on an analyst call that the negative free cash flow reflected growing capex, with AI costs split between servers and data centers. According to the BBC, Alphabet spent $45 billion in the second quarter, with 60% going to servers and 40% to data centers.
BBC Business also noted the company said “the demand still outpaces that investment.” The article added that Alphabet’s chief executive, Sundar Pichai, described the shift to AI as early-stage, and compared its approach to generating returns as “disciplined,” while also pointing to ongoing work to translate frontier capabilities into user experiences.