Alphabet's Negative Cash Flow Sparks AI Spending Concerns

Alphabet Inc., parent company of Google, has reported its first negative quarterly free cash flow in over two decades due to increased capital spending on AI infrastructure. The company's second-quarter capital expenditure hit $44.9 billion, a 100% increase year-over-year, with about 60% going toward servers and 40% toward data centers and networking equipment.

Alphabet raised its full-year forecast again, increasing the range to $195 billion to $205 billion from $180 billion to $190 billion guided in the first quarter. The company also has a $40 billion at-the-market equity program available, though roughly $30 billion of it is earmarked for employee equity tax obligations rather than AI spending.

Berkshire Hathaway, led by Warren Buffett, boosted its Alphabet stake by 83% during the second quarter, making it the company's third-largest U.S.-listed equity holding. The value-investing giant initiated the position, with CEO Greg Abel having the final word on investments.