Alphabet Announces Massive AI-Related Capital Expenditures and Future Commitments
In its second-quarter report, Alphabet (NASDAQ: GOOG) revealed it spent $45 billion on capital expenditures, primarily for artificial intelligence. This marked the first time since going public in 2004 that the company had negative free cash flow. Management raised its full-year capex budget to between $195 billion and $205 billion and expects significant increases in 2027. Alphabet disclosed it has already committed to an additional $811 billion in long-term supply agreements, mostly for AI infrastructure such as chips, data centers, and energy services. These contracts are expected to be fulfilled by 2030, with some extending through 2054. The company is also ramping up sales of its custom Tensor Processing Unit (TPU) systems. Despite concerns over cash flow pressure in the short term, Alphabet remains confident due to strong demand for AI compute and rising performance obligations reaching $520 billion as of June.
Topics: AI investment Alphabet artificial intelligence capex spending