Google's cash burn reaches US$6 billion as spending on artificial intelligence rises again
Cash burn occurred for the first time in the second quarter. Large-scale investment in artificial intelligence infrastructure has transformed it from an asset-light enterprise to a capital-intensive enterprise. The company disclosed that in the three months to the end of June, free cash flow turned to negative US$5.9 billion, significantly lower than analyst expectations; at the same time, Google once again raised its spending expectations for data centers and other artificial intelligence hardware. Chief Financial Officer Anat Ashkenazy said that capital expenditures in 2026 will reach US$195 billion to US$205 billion, higher than the previous guidance of US$180 billion to US$190 billion. After the earnings report was released, the stock fell about 3.5% in after-hours trading. Ashkenazy said: "Investments in technology infrastructure will continue to put pressure on free cash flow. Such investments will help us seize opportunities in the development of artificial intelligence and continue to create substantial returns." This is the second time Google has raised its capital expenditure budget this year. Right now Google is working with Meta, Compete for artificial intelligence infrastructure construction. The total capital expenditures of the four major cloud giants in 2026 may exceed US$725 billion. Before the release of Wednesday's earnings report, the market generally believed that Google was the cloud service provider best able to withstand the pressure of the artificial intelligence arms race, and the cash flow brought by its huge search business was expected to buffer financial pressure. The current cash consumption and the increase in capital expenditures by US$15 billion will intensify investors' concerns about the scale of Google's AI bets. Dirk Markey, managing director of asset management company SLC Management, said: "The market hopes to see the major cloud giants compete for the leading position in the field of artificial intelligence, but the pace of investment cannot seriously erode profits." He also pointed out that Alphabet currently has a better grasp of the balance. The two major business segments drove total revenue to US$120 billion, compared with US$96.4 billion in the same period last year, which was higher than the average analyst estimate of US$117 billion. Google CEO Sundar Pichai told investors: "Long-term changes are underway in many areas, and the process is still in the very early stages... Over the past year, we have become increasingly optimistic about the opportunities ahead." As expenditures related to artificial intelligence continue to increase, Alphabet's debt scale has approached US$100 billion; the company also launched an additional stock issuance plan of approximately US$85 billion in June. This is the first equity financing in more than two decades, which is a sharp reversal from the continuous repurchase of its own shares over the past many years. The increased investment is intended to digest the rising number of pending orders for cloud services. As of the end of the quarter, cloud contract reserves increased to US$514 billion from approximately US$460 billion in the previous quarter. Ashkenazy said that the company will rely on operating cash flow, debt financing and equity financing to support capital expenditures, and emphasized that Google has no plans to issue new shares except for the announced plan. "We also want to maintain a strong, risk-resistant balance sheet," she said.