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Tech earnings highlight continued heavy AI spending despite weak cash flow
Alphabet and Meta reported their lowest free cash flow figures, with Alphabet recording negative free cash flow after spending more on AI than it brought in.
BBC Business reports that major technology firms including Microsoft, Meta, Google, Apple, and Amazon used recent earnings updates to signal they plan to keep spending large sums on artificial intelligence. Investors have focused on whether those outlays are producing measurable financial returns, particularly after swings in tech stock performance.
The article notes that AI-related tools have not yet translated into clear, direct revenue for companies, despite high development and operating costs. It highlights that Alphabet spent heavily on AI, leading to negative free cash flow on revenue of $118 billion, a first for the company as a public business.
For Meta, BBC Business reports free cash flow of $784 million on $61 billion of revenue, describing that as spending nearly as much as it made during the quarter. The report also says Meta's Reality Labs, tied to its AI work, lost nearly $9 billion in the first half of the year.
Wall Street reaction came through lower confidence in management messaging, the outlet says. After Mark Zuckerberg discussed building an AI agent and an operation to sell an AI tool to other firms, Meta shares plunged to their second-lowest level in a year, and the article adds that neither the operation nor the tool currently exists in the source provided.