Alphabet, the parent company of Google, reported a rare decline in free cash flow, which fell to negative $5.9 billion for the recent quarter. This marks the first time in over a decade that the company has recorded negative cash flow after accounting for operational and investment costs. The downturn follows a surge in capital expenditure, with the company now projecting annual AI-related spending to reach $205 billion, up from a previous estimate of $190 billion.
During the second quarter, Alphabet invested $45 billion, with 60% allocated to servers and 40% to data centers. Despite a 23% year-over-year revenue increase to $119.8 billion, Alphabet shares declined by 4% in after-hours trading. Chief Financial Officer Anat Ashkanazi attributed the negative cash flow to these infrastructure investments, noting that demand for AI continues to exceed current capacity. CEO Sundar Pichai emphasized that the company remains committed to these investments, viewing the current AI landscape as being in its early stages with significant potential for future returns.
Tesla also experienced a similar financial trend, reporting negative free cash flow of $1.1 billion for the second quarter—its first such instance in two years. CFO Vaibhav Taneja indicated that the company is currently in a major investment cycle, with capital spending expected to reach $25 billion this year, more than double the amount spent in 2025. Following the announcement, Tesla's stock also saw a 4% decline in after-hours trading.
Source: BBC News
No comments yet. Be the first to share your thoughts.