By Aditya Soni and Deborah Mary Sophia July 23 Alphabet’s first cash burn on record has jolted investors awaiting more Big Tech results next week as soaring AI spending strains one of the world’s most profitable companies, and the pain is only expected to increase.
The Google parent burned $5.9 billion in the second quarter, even as the cloud unit that rents out AI computing power notched a record 82% growth
With Alphabet now expected to spend $15 billion more in 2026 and predicting another increase next year, the outlays behind the cash burn will only rise. The cash hit is one of the clearest signs of how AI is reshaping Big Tech. Once prized for fat margins and cash gushers that could easily fund new bets, the group is now leaning on debt and share sales to bankroll spending, which is set to top $700 billion this year as their cash flows fall short.
That will sharpen scrutiny when Microsoft, Meta Platforms and Amazon report results next week. Shares of all three companies were down between 2% and 4% before the bell on Thursday as Alphabet led the slide at 5%. The drop reflects investor concerns that the other tech giants will likely follow Alphabet by raising spending forecasts despite payoffs lagging the pace of outlays. “The risk is tilted towards further increases, particularly while Microsoft and others remain capacity-constrained,” Charu Chanana, chief investment strategist at Saxo Markets, said. “But investors will increasingly focus on how much of that cash must be reinvested simply to remain competitive — and whether AI revenue can grow faster than capital expenditure, depreciation and operating costs.” Analysts expect Alphabet and Amazon to burn cash in 2026, while Meta’s cash flow is likely to shrink 95.7% to just $1.85 billion.