Google Posts Negative Free Cash Flow as AI Infrastructure Spending Surges

Alphabet reported negative free cash flow of approximately $5.8 billion for the most recent quarter, the first time the company has posted a negative figure, as it sharply increased capital spending on AI infrastructure.

The company raised its 2026 capital expenditure outlook to between $195 billion and $205 billion, up from earlier projections. The spending is directed at data centers, custom chips, and cloud infrastructure needed to support its Gemini AI models and Google Cloud services.

Intel also raised its 2026 capital spending plans to $20 billion, citing increased demand for data center CPUs used to coordinate AI workloads. The company reported its fastest revenue growth in years, benefiting from the AI infrastructure buildout across the industry.

The chip market has seen intense activity. AI chip startup Etched raised $300 million at a $10.3 billion valuation to develop specialized chips for transformer models, positioning itself as a challenger to Nvidia's dominance. AMD and Cerebras Systems announced a partnership to allow customers to mix hardware architectures for more efficient AI inference.

Chinese memory chipmaker CXMT has expanded its market influence, complicating global trade dynamics. Samsung and Apple are expected to pass higher memory component costs to consumers.

Japan launched a 44-company consortium called Noestra, focused on physical AI and robotics, to reduce reliance on foreign technology and build on the country's strengths in industrial automation and sensors.

Microsoft has begun replacing third-party AI models with its own MAI family for production workloads in Excel and Outlook, aiming to reduce inference costs. The move signals a broader trend among large technology companies toward developing proprietary models for internal use.