Google burned through nearly $6bn in cash last quarter as AI spending surged

Google’s net income quadrupled to $112bn, beating analysts’ expectations of $35.6bn © Bloomberg

Google burned through cash in the second quarter for the first time in decades as gargantuan AI infrastructure spending has rapidly transformed the group from an asset-light business into a capital-intensive one.

The company said free cash flow for the three-month period to end June turned to negative $5.9bn amid the splurge on data centres and other AI hardware, much more than analysts had expected.

Still, the AI spending is driving accelerating revenues at its cloud unit, which reported 82 per cent growth from a year earlier to $24.8bn in the period.

The growth drove total revenue to $120bn, from $96.4bn a year ago, beating the analysts’ average estimates of $117bn, Google’s parent company Alphabet said on Wednesday.

Sundar Pichai, Google’s chief executive, told investors that the second quarter “was an amazing quarter” and praised the company’s “differentiated, full-stack approach to AI”.Google in April lifted its expected capital expenditure spending for the year to as much as $190bn and said it would rise further in 2027. The group reported second-quarter capex rose to $44.9bn.

Net income quadrupled to $112bn, beating analysts’ expectations of $35.6bn, according to Visible Alpha data, benefiting from gains on Google’s investments which include a stake in SpaceX. Operating income, which does not include investment gains, rose 30 per cent to $40.8bn, with operating margin expanding to 34 per cent.

Google has gained ground in the AI race thanks to a “full-stack” strategy that combines its own chips, data centres, frontier models and consumer products. It is under pressure to release its latest flagship model, as OpenAI, Anthropic and competitors in China announce technical advances.

It once funded such investment from the cash thrown off by search, but the rising bills have begun to strain its finances. Alphabet has taken on tens of billions in debt and in June moved to raise about $85bn in its first share sale in more than two decades — a sharp reversal after years of buying back its own shares.

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