Google burning through cash with spiralling AI costs
Alphabet, the parent company of Google, reported negative free cash flow for the first time in a decade due to massive investments in AI infrastructure. Despite strong revenue growth, the company is prioritizing AI development over short-term cash reserves.
Why it matters
This highlights the immense capital intensity of the current AI arms race among major technology firms.
Image source, Reuters Image caption, Google and its paranet company Alphabet have spent huge amounts on AI.
Google parent Alphabet saw its business continue to grow in recent months, yet growing spending on artificial intelligence (AI) infrastructure put its leftover cash into negative territory.
The company's free cash flow, the cash it maintained after paying for operations and investments, came in at negative $5.9bn (£4.3bn) for the first time in at least a decade, according to its past financial records.
Alphabet's spending on AI is now expected to hit as much as $205bn this year, an increase from $190bn, as major tech companies race to build around a new wave of the technology.
Meanwhile, Alphabet's combined quarterly revenue hit $119.8bn, up 23% compared with the same time last year.
But the company's stock fell 4% in after hours trading.
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