Alphabet's Negative Cash Flow Sparks Concerns from Top Investors

Two top investors on The Investor's Podcast expressed concerns about Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction), the parent company of Google, and its future prospects. Daniel Mahncke and Shawn O'Malley, who have a significant holding in Alphabet, stated that they are less bullish on the stock compared to two years ago.

One of the key reasons for their concerns is Alphabet's negative cash flow for the first time since its IPO. The company has had to raise over $50 billion in long-term debt and will issue about $85 billion in new shares this year to fund capital expenditures, which are expected to reach as high as $300 billion next year.

This increased spending is likely to compress operating margins from 34-35% today to as low as 20% by 2030. The investors also pointed out that the buyback yield, which made the company attractive in the past, has evaporated, and repurchases have been suspended since Q2 2026.

Despite Alphabet's growth in Google Cloud, which is growing at an impressive 82%, and Gemini adoption across major enterprises, the investors are cautious about the future. They believe that the AI buildout has eliminated free cash flow, suspended buybacks, and doubled long-term debt, making it a challenging time for the company.