Alphabet posts first negative free cash flow since IPO as AI capex climbs

Alphabet reported negative free cash flow of about $5.9 billion in the second quarter of 2026, its first negative reading since the company went public, as spending on AI infrastructure accelerated.

The result, posted in Alphabet’s second-quarter report, landed alongside a bigger signal to investors: Chief Financial Officer Anat Ashkenazi raised Alphabet’s 2026 capital-spending guidance to between $195 billion and $205 billion, up from a prior range of $180 billion to $190 billion. The roughly $15 billion increase is aimed largely at data centers and chips for AI.

That combination overshadowed otherwise strong growth. Google Cloud revenue rose 82% year over year in the quarter, one of the fastest rates the unit has posted. But the market focused on cash going out the door, and Alphabet shares fell roughly 3.5% to 6% after the report.

The quarter puts a hard number on a tension running through the industry: hyperscalers are spending faster than their AI products currently return, betting the capacity pays off later. Alphabet, long prized by shareholders for its cash generation, has now crossed into negative free cash flow to keep pace.

The capex guide is the figure to watch. Ashkenazi’s raised range signals Alphabet expects the buildout to intensify through the rest of 2026 rather than plateau, even as the free-cash-flow line turns red.