Alphabet's free cash flow slipped below zero in the June quarter, landing at about negative $5.9 billion. Its earlier filings suggest that is the first such shortfall in ten years or more.

The reversal came as building costs outran the cash the business threw off. Capital expenditure reached $45 billion in the quarter, with about 60% going to servers and 40% to data centers.

And the plan keeps rising. Alphabet's finance chief lifted the 2026 capital-spending forecast to a range of $195 billion to $205 billion, up from $180 billion to $190 billion, its second such increase this year. She tied the bigger number to a supply-constrained rush to keep pace with demand for AI.

The underlying business looked strong on paper and beat Wall Street, which had forecast $116.5 billion in revenue and $35 billion in profit. Revenue rose 24% to $119.8 billion, Google Cloud jumped 82% to $24.8 billion, and the cloud backlog of contracted work reached $514 billion. Profit quadrupled to $112.1 billion — though much of that flowed from gains on AI-related holdings such as SpaceX and Anthropic rather than from operations; those stakes, valued at about $99 billion, contributed $77 billion to the total after SpaceX went public in June.

Investors fixed on the bill rather than the beat. Shares fell about 3% in after-hours trading as the market weighed the heavier planned spending against the shrinking cash figure. The drop landed amid steadily rising nerves over how much big technology firms are pouring into AI. A partner at wealth manager Killik & Co told the BBC there was some surprise at the scale of Google's spending, called the $195-205 billion figure huge, and said the after-hours drop pointed to concern about those levels.

Executives defended the outlay. The chief financial officer told the earnings call that AI demand still runs ahead of the company's investment, and that Alphabet would keep spending as long as it saw such attractive opportunities. The chief executive said the shift to AI still felt like early innings and called the company's approach to returns disciplined.

The same spending that rattled Alphabet's own shareholders cheered its suppliers. Shares of Asian chipmakers climbed after the results, with South Korea's Kospi up 3.6% and both Samsung and SK Hynix adding more than 2%, on bets that they would capture a share of the larger AI outlays.