Alphabet burns $6 billion due to investments in AI

Alphabet, the home mother of Googlelost more than 3% in the after-hours and burned cash for 6 billion dollars for the first time since you are listed on the stock exchange decades ago, as huge investments in infrastructure forIA they transformed it from a capital-intensive company to a capital-intensive company.

Alphabet’s comment

The holding company stated that the flow of free cash for the three months to the end of June it stood at -$5.9 billion, a value significantly lower to analysts’ expectations, following a new increase in spending forecasts for data center and other equipment for artificial intelligence. The financial director Anat Ashkenazi said capital expenditures in 2026 will be between 195 and 205 billion dollarsup from the previous forecast of 180-190 billion dollars. The stock lost about 3.5% in trading after-hours.

“We expect free cash flow to remain under pressure because of our investments in technical infrastructure, which allow us to take advantage of the opportunities presented by AI and continue to generate attractive returns” Ashkenazi said.

Rival leaders and investor anxieties

This second increase in Google’s capital expenditure budget this year comes as the company races against rivals Meta, Microsoft e Amazon to build infrastructure for artificial intelligence, with the four giants together planning to spend more 725 billion dollars in 2026.

Before Wednesday’s results, Google was considered a leading company in the AI ​​sector, better positioned to resist the race for armaments in this field, thanks to the cash flows deriving from its activity on search engineswhich were supposed to cushion the financial pressure. Its high consumption of liquidity and the increase of 15 billion of dollars for capital expenditures will increase investors’ anxiety for the AI ​​exhibition.

The increase in sales

Google has maintained investor confidence in part because its spending on artificial intelligence has resulted in a increase in sales. Its cloud division announced growth Wednesday dell’82% compared to the previous year, reaching i 24.8 billion of dollars quarterly.

The core business of advertising on search engines grew by 17% year-on-yeararriving at 63.3 billion of dollars, slightly below expectations. Google has gained ground in the AI ​​race thanks to a strategy “full-stack” which combines its own chips, data centers, cutting-edge models and consumer products. The company is under pressure to launch its latest flagship model, while OpenAI, Anthropic and Chinese competitors announce technological advances.

The CEO Sundar Pichai said the company is now focusing its efforts and computing power on training the Gemini 4, its next flagship model, and added that the pace of release of new models of Google will increase. As spending on AI increases, Alphabet has accumulated almost $100 billion in debt and in June proceeded to harvest approx 85 billion dollars with his first sale of shares over two decades, a clear turnaround after years of buying back its own shares. Ashkenazi said the company is tapping into the cash flow arising from its operational activities, as well as financing through debt e own capitalspecifying that Google has no intention of di sell additional shares in addition to those already announced. “We also want to make sure we have a budget solid and resilient“he said.