Google posts first negative cash quarter since 2004, burning $5.9B on AI

For 22 consecutive years since August 2004, Alphabet generated more cash than it spent every single quarter. That streak ended between April and June 2024. The company spent $44.9 billion（約7.2兆円） on AI infrastructure—chips, servers, and data centers—during those three months, an average of $490 million（約780億円） a day. Operating cash flow during the same stretch totaled $39.1 billion（約6.3兆円）, leaving a $5.9 billion（約9400億円） shortfall. This is Google's first quarter of negative free cash flow since going public.

The underlying business, however, remained strong. Alphabet's revenue rose 24% year-over-year to $119.8 billion（約19兆円）, and the company has now delivered double-digit growth for 12 consecutive quarters without interruption. Search and other revenue grew 17% to $63.3 billion（約10兆円）. YouTube advertising rose 13%, buoyed by 1.7 billion people who watched World Cup videos on the platform. Google Cloud posted the strongest growth: revenue jumped 82% to $24.8 billion（約4兆円）, operating profit climbed from $2.8 billion（約4500億円） to $8.8 billion（約1.4兆円） year-over-year, and the backlog of signed-but-not-yet-billed work reached $514 billion（約82兆円）.

Despite these strong topline results, reported earnings per share came to $9.11—but the company disclosed that $6.26 of that figure came from a $99 billion（約16兆円） paper gain on stock holdings. Stripped of that one-time gain, earnings landed near $2.85 a share, roughly in line with analyst expectations of $2.88. The true beat was in revenue, not profit; such paper gains can reverse in subsequent quarters.

On the earnings call, finance chief Anat Ashkenazi announced a significant increase in the company's spending trajectory. Google raised its full-year capex plan by $15 billion（約2.4兆円）, to a range of $195 billion（約31兆円） to $205 billion（約33兆円）—up from prior guidance of $180 billion（約29兆円） to $190 billion（約30兆円）. Ashkenazi also signaled that 2027 spending would be "higher still." The Q2 capex of $44.9 billion（約7.2兆円） represented a doubling compared to the same quarter a year earlier, underscoring the accelerating pace of AI infrastructure investment.

To fund this spending and maintain balance-sheet flexibility, Alphabet tapped capital markets. In June, the company sold $49.6 billion（約7.9兆円） in stock, including preferred shares bearing a 6.25% dividend. It also issued $20.3 billion（約3.2兆円） in bonds. Long-term debt has climbed sharply to $98.2 billion（約16兆円） from approximately $16 billion（約2.6兆円） a year ago. Despite holding more than $240 billion（約38兆円） in cash and investments, Google felt compelled to raise outside capital—a signal that management expects sustained, elevated capex demands ahead. The stock market reacted negatively: GOOGL fell 4.24% in after-hours trading as soon as Ashkenazi disclosed the upward spending revision, despite the quarter's revenue beat.

Google's pivot to heavy AI spending marks a departure from two decades of consistent cash generation. The company spent $44.9 billion（約7.2兆円） on AI infrastructure in Q2 alone—double what it spent a year earlier—a level the business simply cannot sustain from operating cash alone. Although Alphabet generated $39.1 billion（約6.3兆円） in free cash, it fell $5.9 billion（約9400億円） short of its capex needs, breaking a 22-year streak of positive free cash flow since August 2004.

The business fundamentals themselves remain robust. Revenue climbed 24% to $119.8 billion（約19兆円）; search and other products grew 17% to $63.3 billion（約10兆円）; YouTube ads rose 13% boosted by 1.7 billion viewers of World Cup videos; and Google Cloud—the fastest-growing segment—jumped 82% to $24.8 billion（約4兆円） in revenue with operating profit surging from $2.8 billion（約4500億円） to $8.8 billion（約1.4兆円） year-over-year. Yet those earnings gains are being outpaced by capital expenditure. The company now plans to spend between $195 billion（約31兆円） and $205 billion（約33兆円） in full-year capex, up from a prior guidance of $180–$190 billion（約30兆円）, and has signaled that 2027 will be even higher still.

To bridge the gap, Google is tapping capital markets aggressively. It raised $49.6 billion（約7.9兆円） in stock sales and $20.3 billion（約3.2兆円） in bond issuance in June alone. Long-term debt has surged to $98.2 billion（約16兆円） from approximately $16 billion（約2.6兆円） a year prior—a sixfold increase. For shareholders, the stock fell 4.24% in after-hours trading when the increased spending guidance was announced, suggesting the market is pricing in a sustained period of negative free cash flow and rising leverage as Google races to build AI infrastructure capacity.

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