Alphabet is spending like there’s no tomorrow, and it’s freaking shareholders out.
Its shares dropped 7% after it raised its AI spending for the third time this year to $205 billion. Its free cash flow turned negative for the first time in its 22 years as a public company, and it bought back zero shares for the second straight quarter. It also has a pending $40 billion share offering, which will put further pressure on the stock price. CFO Anat Ashkenazi said the company’s 2027 capex will increase significantly and “continue to put pressure” on profits.
That Google — perhaps the best positioned of the hyperscalers to keep spending, given its money-spinning ad and cloud businesses — is being punished shows growing investor skepticism that all the AI spending will pay off. The tech companies without Google’s cash cows will be left in an even weaker spot, which explains why Meta is hustling to launch its own cloud business.
