Google’s $205 Billion AI Bet Turns Its Cash Negative for First Time

Google’s free cash flow turned negative for the first time since the company went public as its aggressive investments in artificial intelligence infrastructure pushed spending to record level, according to Financial Times report.

The tech giant reported negative free cash flow of $5.9 billion for the second quarter after sharply increasing spending on data centers, AI chips, and other computing infrastructure. The company also raised its planned capital expenditure for 2026 to $195 billion to $205 billion, up from previous guidance of $180 billion to $190 billion.

Chief Financial Officer Anat Ashkenazi said free cash flow is expected to remain under pressure as Google continues investing heavily to capitalize on AI opportunities. The revised spending plan marks the company’s second increase in AI infrastructure investment guidance this year.

Despite the surge in spending, Google’s core businesses continued to post strong growth. Total revenue climbed to $120 billion, up from $96.4 billion a year earlier, while Google Cloud revenue jumped 82 percent to $24.8 billion. Search advertising revenue also rose 17 percent to $63.3 billion.

Chief Executive Officer Sundar Pichai said Google has become increasingly optimistic about AI opportunities over the past year and is accelerating development of its next-generation Gemini 4 model. He added that the pace of the company’s AI model releases is expected to increase.

Google’s capital expenditure reached $44.9 billion during the quarter, reflecting the company’s race with rivals including Microsoft, Amazon, and Meta to expand AI infrastructure. The four companies are collectively expected to spend more than $725 billion on AI infrastructure in 2026.

The company reported net income of $112 billion, boosted by gains on investments including its stake in SpaceX, while operating income increased 30 percent to $40.8 billion.