Jul 26, 2026
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Add us on GoogleFor 22 years, Google generated more cash than it spent every quarter. That record broke between April and June this year.
Alphabet, Google’s parent, spent $44.9 billion on AI infrastructure (chips, servers and data centers) over those three months — or about $490 million a day. The business generated $39.1 billion in cash during the same stretch. That left it $5.9 billion in the hole, its first ever quarter of negative free cash flow since the company went public in August 2004.
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The stock [GOOGL] fell 4.24% in after-hours trading as soon as the company told analysts it would raise its full-year spending plan by another $15 billion — a drop that came despite revenue topping Wall Street estimates.
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Google’s core business is still growing fast
The results themselves were strong, because revenue rose 24% to $119.8 billion. Growth hasn’t dipped below double digits in three years — 12 quarters running. Search “and other” grew 17% to $63.3 billion, and YouTube ads rose 13%, helped by the 1.7 billion people who watched World Cup videos on the platform.
Google Cloud actually grew the fastest of all. Its revenue jumped 82% to $24.8 billion, operating profit climbed from $2.8 billion to $8.8 billion year-over-year, and its backlog (work signed but not yet billed) reached $514 billion.
They reported $9.11 in earnings per share, but a $99 billion paper gain on stocks it holds accounted for $6.26 of that, by the company’s own accounting. Strip out that one-time gain and earnings land near $2.85 a share — roughly in line with the $2.88 analysts expected, and a touch under by some counts. The clear beat was clearly on revenue, not profit, and paper gains like that one can reverse the next quarter.
On the same call, finance chief Anat Ashkenazi raised Google’s spending plan for the year to between $195 billion and $205 billion, up from $180 billion to $190 billion, and said 2027 would be higher still. The $44.9 billion Google spent last quarter was double what it spent a year earlier.
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How Google is paying for it — and why it matters to your shares
Google holds more than $240 billion in cash and investments, yet it still raised outside money this quarter. In June it sold $49.6 billion in stock, including preferred shares that carry a 6.25% dividend, and it issued $20.3 billion in bonds. Long-term debt has climbed to $98.2 billion, from about $16 billion a year ago, Ashkenazi told analysts.
It also stopped buying back its own stock. Google repurchased $13.2 billion in shares in the same quarter last year and bought back nothing this time.
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That shift reaches ordinary shareholders since buybacks reduce the number of shares outstanding. And that lifts the value of each one that’s left; issuing new stock does the reverse and spreads ownership thinner.
Google kept its 22-cent quarterly dividend, so it hasn’t stopped returning cash entirely. But with buybacks paused and roughly $70 billion raised from stock and bond investors this quarter, the flow has reversed — Google is pulling in far more than it pays back out.
Ashkenazi said demand for AI computing is running ahead of what Google can build, and that the company will keep investing “as long as we see an attractive return on that investment.”
So should you be worried?
It’s fair to say that this is nothing to lose sleep over. The cash burn was deliberate, and Google can plainly afford it.
Over the past year the company still produced $185.7 billion in operating cash and $53.3 billion in free cash flow, and it holds $242.5 billion in cash and securities.
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The spending is paying off in cloud, too, where operating margins widened from 20.7% to 35.6% in a year. Google expects to book more than half of that $514 billion backlog as revenue within two years.
The worries in this are definitely longer-term. Free cash flow has dropped over three straight quarters — $24.6 billion, then $10.1 billion, then negative $5.9 billion — while the spending behind that slide keeps rising. The chips Google is buying lose value over time, and the resulting depreciation will weigh on profits for years, whether or not AI demand holds.
Ashkenazi has warned that renting computing capacity from other providers will pressure cloud margins this quarter, and that most revenue from Google’s own AI chips, known as TPUs, won’t arrive until 2027.
Sundar Pichai, Google’s CEO, also told analysts he is more optimistic than he was a year ago and sees the AI shift as still in its early stages. He may be right. What’s changed is that Google is now funding that conviction with debt and share sales rather than surplus cash. At roughly $200 billion a year, a slowdown in AI demand — or a rival overtaking Gemini — would cost far more than it would have when the bill was a quarter of the size.
When Google went public in 2004, Larry Page and Sergey Brin told investors it was “not a conventional company” and never intended to become one. Twenty-two years later, they’re proving it with borrowed money and freshly sold stock.
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Godwin Oluponmile is a content specialist, SEO strategist and copywriter with seven years of expertise in finance, Web 3.0, B2B SaaS and technology. His work has been featured in publications such as Entrepreneur, HackerNoon, Blocktelegraph and Benzinga.
