Google has reported negative free cash flow for the first time since the company became a public business, as it continues spending billions of dollars on artificial intelligence (AI) infrastructure.
According to a report by the Financial Times, Google’s heavy investment in AI technology, data centers, and advanced computer chips caused its free cash flow to fall to negative $5.9 billion during the second quarter of the year.
Free cash flow is the money a company has left after paying for its operating costs and major investments. A negative free cash flow does not necessarily mean the company is losing money. Instead, it shows that Google is spending more cash than it is generating because of its massive investments in future growth.
Google has significantly increased its budget for AI development. The company now plans to spend between $195 billion and $205 billion on capital investments during 2026. Earlier, Google had expected to spend between $180 billion and $190 billion, making this the second time this year that it has raised its AI investment plans.
Most of this money will be used to build new data centers, buy more AI chips, improve computing infrastructure, and expand the systems needed to train and run advanced AI models.
Google’s Chief Financial Officer Anat Ashkenazi said the company’s free cash flow is likely to remain under pressure because Google wants to take full advantage of the growing opportunities in artificial intelligence.
She explained that the company believes AI will play a major role in its future business, making these large investments necessary despite the short-term financial impact.
Even though Google is spending record amounts on AI, its main businesses continue to perform very well.
The company reported total revenue of $120 billion during the quarter, compared to $96.4 billion during the same period last year. This represents strong year-on-year growth across several business areas.
One of Google’s fastest-growing businesses was Google Cloud, which generated $24.8 billion in revenue. This was an impressive 82 percent increase compared to the previous year, showing that more businesses are using Google’s cloud services.
Google’s core Search advertising business also remained strong. Revenue from search ads increased by 17 percent, reaching $63.3 billion, as businesses continued spending on online advertising.
Google CEO Sundar Pichai said the company has become even more confident about the future of artificial intelligence over the past year.
He said Google is speeding up the development of its next-generation AI model, Gemini 4, which is expected to bring major improvements in AI capabilities.
Pichai also revealed that Google plans to release new AI models more frequently as competition in the AI industry continues to grow.
During the quarter, Google’s capital expenditure reached $44.9 billion, one of the highest spending levels in the company’s history.
This spending is mainly focused on expanding AI infrastructure so Google can compete with other technology giants such as Microsoft, Amazon, and Meta, which are also investing heavily in artificial intelligence.
According to industry estimates, these four companies together are expected to spend more than $725 billion on AI infrastructure during 2026.
Despite the huge investments, Google remained highly profitable.
The company reported net income of $112 billion, helped by strong business performance and gains from investments, including its ownership stake in SpaceX.
At the same time, Google’s operating income increased by 30 percent, reaching $40.8 billion, showing that its core operations continue to generate strong profits.
Overall, Google’s latest financial results show that the company is making one of the biggest investments in artificial intelligence in its history. Although these massive spending plans have pushed its free cash flow into negative territory for the first time since going public, Google believes the investment will strengthen its position in the rapidly growing AI market. With strong revenue growth, rising cloud business, healthy advertising income, and continued profitability, the company is betting that today’s record AI spending will lead to even greater growth and innovation in the years ahead
