Alphabet’s first cash burn on record has jolted investors awaiting more Big Tech results next week as soaring AI spending strains one of the world’s most profitable companies, and the pain is only expected to increase.

AI Spending Climbs

The Google parent burned $5.9 billion in the second quarter, even as the cloud unit that rents out AI computing power notched a record 82% growth. With Alphabet now expected to spend $15 billion more in 2026 and predicting another increase next year, the outlays behind the cash burn will only rise.

The cash hit is one of the clearest signs of how AI is reshaping Big Tech. Once prized for fat margins and cash gushers that could easily fund new bets, the group is now leaning on debt and share sales to bankroll spending, which is set to top $700 billion this year as their cash flows fall short.

That will sharpen scrutiny when Microsoft, Meta Platforms and Amazon report results next week. Shares of all three companies were down between 2% and 4% before the bell on Thursday as Alphabet led the slide at 5%.

Analysts expect Alphabet and Amazon to burn cash in 2026, while Meta’s cash flow is likely to shrink 95.7% to just $1.85 billion.

Google Cloud Growth

Google Cloud was an absolute blow out, said Richard Clode, Portfolio Manager of Janus Henderson Investors’ Global Technology Leaders. Alphabet has competitive advantage running all the way through the stack from their own custom AI chips through to distribution to billions of users.

Growth at Amazon Web Services – the largest cloud provider in the U.S. – is expected to hit 31.04% in the quarter, faster than the 28.4% increase seen in the previous three months.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.