Luke James, writing for Tom’s Hardware:

Google’s parent company Alphabet recently reported negative free cash flow of $5.9 billion for the second quarter of 2026, the company’s first cash-negative quarter since its 2004 IPO, after capital expenditures doubled year-over-year to a record $44.9 billion and exceeded the $39.1 billion its operations generated as it continues its rapid buildout of AI data centers, according to its earnings release.

CFO Anat Ashkenazi raised full-year capex guidance to between $195 billion and $205 billion, up from $180 billion to $190 billion, and disclosed that Google delivered TPU systems to customers’ data centers for the first time, a shift from renting the chips exclusively through Google Cloud.

The quarterly deficit is small compared to the sums moving through the business, and the firm’s trailing 12-month free cash flow remains positive at $53.3 billion. Back in February, Alphabet raised its guidance, but since then, spending has exceeded the cash the business generates due to its AI buildout, and Alphabet is covering the difference with borrowed money and new stock.

At first glance, this seems alarming—or at least indicative of poor judgment on Google’s part. However, it serves as a reminder of the timeless gold rush adage: the real money is made selling shovels and denim jeans. Other companies can throw all the experimental AI spaghetti they want at the wall; even if those individual projects fail, Google makes its money by providing the underlying compute all the same. Their capex is proof they understand this quite well.