Google's burning through cash despite record profits, and take a wild guess on what

Artificial Intelligence, now known in every household as AI, has long been positioned as the pioneering technology that frees humans from their mundane obligations and lets them focus on creative pursuits. During its rise since the launch of ChatGPT, however, AI has proven to excel at routine creative tasks like writing and generating images, videos, and even music. And that has been used as a cover to discharge the human workforce for better financial rewards. While the results may be contentious, and unique for companies now shifting workloads to AI, there’s a clear money pattern that cannot be ignored, and that has to do with the record money spent on building core AI resources. Google’s latest earnings call verifies that notion.

Google’s parent company, Alphabet, announced its Q2 earnings. It said revenue grew by 24% year-on-year in Q2 2026, with quarterly revenue hovering around $120 billion. This accounts for one of the highest profits Google’s parent has made in, like, ever. The biggest contributor to that growth was Google Cloud Platform, which includes enterprise AI solutions, AI infrastructure, and the core cloud services for corporate clients, contributing roughly $25 billion in revenue during the period. Interestingly, part of that comes from Google’s resources commissioned by rival Anthropic. Alphabet’s other avenues, including Google Ads, YouTube Ads, and other subscription-led services, also recorded higher YoY revenue.

However, one key area where Google lost a major chunk this quarter is its liquid cash. According to the latest balance sheet, Alphabet posted a free cash flow of negative $5.855 billion. According to the BBC, this is the first time in 10 years that Google has posted negative cash flow. This is driven by increased capital expenditure of $44.9 billion, almost twice the capex of $22.4 billion last year. Most of these expenses were notably incurred due to increasing AI-related expenses, which include building new infrastructure (data centers, servers, and TPUs), along with increased AI R&D expenses. According to rough estimates by analysts, Google’s AI-related spending may scale to roughly $205 billion in this financial year.

It’s worth pointing out that instead of dipping into its cash reserves, Alphabet raised new capital to the tune of $85 billion, including a $10 billion investment from Berkshire Hathaway. That’s why Alphabet’s total reserve of cash equivalents and securities rose from $127 billion at the end of Q1 to nearly double, at $242.5 billion, at the end of Q2.

Alphabet isn’t the only one excessively spending on AI infrastructure. According to OpenAI’s recently leaked financials, the company’s losses widened in 2025 as its spending increased to $34 billion, more than quadrupling its losses compared to 2024.

Exuberant spending is not just the case with companies like Google and OpenAI, but also smaller companies relying on AI. In recent months, we’ve seen a shift from tokenmaxxing to reduced spending and a return to reliance on the human workforce due to unprecedented AI operational costs. Whether that’s the beginning of the pricking of the AI bubble is something difficult to say, but Alphabet’s overall ballooning profits suggest it’s not preparing for a slowdown anytime soon.