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 [1]. 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 [2]. 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 [3]. 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 [4]. 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 [5]. Microsoft, whose current fiscal year will end next June, is expected to garner $25.39 billion in cash, less than half of the estimated $58.74 billion in the previous financial year [6]. Their capex-to-revenue ratio, a gauge of how much of every sales dollar is being plowed back into spending, is set to nearly double this fiscal year [7].
Meta is expected to hit 54.9% from 35.9%, Alphabet 41% from 23%, Microsoft 45% from 31% and Amazon 25% from 18% [8]. Google Cloud's strong growth raises bar for Amazon, Microsoft [9]. 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 [10].
Sources
- Reuters - Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
- Reuters - Alphabet burned $5.9 billion in the second quarter
- Reuters - Alphabet now expected to spend $15 billion more in 2026
- Reuters - The cash hit is one of the clearest signs of how AI is reshaping Big Tech
- Reuters - Analysts expect Alphabet and Amazon to burn cash in 2026
- Reuters - Microsoft, whose current fiscal year will end next June, is expected to garner $25.39 billion in cash
- Reuters - Their capex-to-revenue ratio, a gauge of how much of every sales dollar is being plowed back into spending, is set to nearly double this fiscal year
- Reuters - Meta is expected to hit 54.9% from 35.9%, Alphabet 41% from 23%, Microsoft 45% from 31% and Amazon 25% from 18%
- Reuters - Google Cloud's strong growth raises bar for Amazon, Microsoft
- Reuters - 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
