Google experienced negative free cash flow of $5.9bn in the second quarter, a first in decades, due to significant AI infrastructure spending. This marks a shift from an asset-light to a capital-intensive business model.

Despite the cash burn, AI investment is fueling rapid revenue growth in Google's cloud division, which saw an 82% increase year-over-year to $24.8bn. Total revenue reached $120bn, surpassing analyst expectations. CEO Sundar Pichai highlighted the company's "full-stack approach to AI" as a key driver.

Google has increased its capital expenditure forecast to $190bn for the year, with further rises expected in 2027. The company's second-quarter capex rose to $44.9bn. Net income quadrupled to $112bn, boosted by investment gains, including a stake in Space X. Operating income increased 30% to $40.8bn.

The company is facing pressure from competitors like OpenAI and Anthropic. To fund its investments, Alphabet has taken on debt and recently launched its first share sale in over two decades, raising approximately $85bn.