\n<\/p>\n
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.<\/b><\/p>\n
The company’s free cash flow, the cash it maintained after paying for operations and investments, came in at negative $5.9bn (\u00a34.3bn) for the first time in at least a decade, according to its past financial records.<\/p>\n
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<\/a> around a new wave of the technology. <\/p>\n Meanwhile, Alphabet’s combined quarterly revenue hit $119.8bn, up 23% compared with the same time last year.<\/p>\n But the company’s stock fell 4% in after hours trading.<\/p>\n Anat Ashkanazi, Google’s chief financial officer, noted on a call with financial analysts that the company had shown negative free cash flow due to growing capital expenditures, essentially all of which was related to AI spending.<\/p>\n She said the company spent $45bn in the second quarter, with 60% of the cost going towards servers and the remaining 40% going towards data centres. <\/p>\n Alphabet’s capital spending was $36bn in the first quarter of this year.<\/p>\n Ashkanazi said on the call that when it comes to AI, “the demand still outpaces that investment”. <\/p>\n “As long as we see these attractive opportunities to invest, we will continue to invest.”<\/p>\n Sundar Pichai, Google’s chief executive, said that the technological shift to AI tools and capabilities still “feels like early innings in a shift across multiple areas” and that the company’s plans around generating financial returns on its spending were “disciplined”. <\/p>\n “What I see with what you can do with frontier capabilities, there is still a lot of work left to do to translate that into experiences for our users. So that looks like extraordinary opportunities with extraordinary returns.”<\/p>\n