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Google burning through cash with spiralling AI costs
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◎ Multiple-sources
Google parent Alphabet saw its business continue to grow in recent months, yet growing spending on artificial intelligence (AI) infrastructure put its leftover cash into negative territory.
Key facts
- They said that this year the total they will spend will be between $195bn and $205bn
- Alphabet's spending on AI is now expected to hit as much as $205bn this year, an increase from $190bn, as major tech companies race to build around a new wave of the technology
- She said the company spent $45bn in the second quarter, with 60% of the cost going towards servers and the remaining 40% going towards data centres
- Meanwhile, Alphabet's combined quarterly revenue hit $119.8bn, up 23% compared with the same time last year
Summary
The company's free cash flow, the cash it maintained after paying for operations and investments, came in at negative $5.9bn (£4.3bn) for the first time in at least a decade, according to its past financial records. Alphabet's spending on AI is now expected to hit as much as $205bn this year, an increase from $190bn, as major tech companies race to build around a new wave of the technology. Meanwhile, Alphabet's combined quarterly revenue hit $119.8bn, up 23% compared with the same time last year. Anat Ashkanazi, Google's chief financial officer, noted on a call with financial analysts that the company had shown negative free cash flow due to growing capital expenditures, all of which was related to AI spending.