US$5.9 Billion Burned in Just 3 Months: Tech Giants Stagger Under AI Spending Spree
Jakarta, CNBC Indonesia - Technology giants are deploying ever greater ‘ammunition’ to develop advanced artificial intelligence (AI) systems. The enormous capital expenditure has made investors anxious, questioning what the return and profit schemes will look like in the future.
The first record cash outflow from Alphabet (Google) has startled investors awaiting the performance reports of other tech giants next week. The surge in AI development spending has burdened one of the most profitable companies in the world, and that burden is expected to keep growing.
Google’s parent company was reported to have ‘burned’ US$5.9 billion (Rp 106 trillion) throughout the second quarter (Q2) of 2026. The jumbo spending was recorded as its cloud services unit posted record growth of 82%. Alphabet’s cloud business rents out AI computing power.
The impact on its cash position is one of the clearest indicators of how AI is transforming the face of Big Tech. These companies were previously known for their large profit margins and abundant cash flows that could easily fund various new initiatives.
However, since the AI race intensified, Big Tech has instead come to rely on debt and share sales to finance its spending. Big Tech’s debt is estimated to exceed US$700 billion (Rp 12,579 trillion) this year due to insufficient internal cash flow.
The situation will draw sharper scrutiny when Microsoft, Meta Platforms and Amazon report their financial results next week. Alphabet shares fell around 6% in early trading on Thursday (23/7), while Meta and Amazon shares each dropped around 3.5%. Microsoft shares, meanwhile, showed no significant change.
The share price declines reflect investors’ concerns that other tech giants will likely follow Alphabet’s lead by raising spending projections, even as returns on those investments still lag behind the scale of the outlays.
“The risks tend to point towards further increases, especially while Microsoft and other companies remain constrained by capacity issues,” said Charu Chanana, chief investment strategist at Saxo Markets, quoted by Reuters on Friday (24/7/2026).
“However, investors will increasingly scrutinise how much cash must be reinvested to remain competitive, and whether AI revenue can grow faster than capital expenditure, depreciation and operating costs,” she added.
Analysts expect Alphabet and Amazon to burn through significant cash in 2026, while Meta’s cash flow is predicted to shrink by 95.7% to just US$1.85 billion.
Microsoft, whose fiscal year ends in June, is expected to record cash of US$25.39 billion, less than half the estimated US$58.74 billion in the previous financial year.
Their capital expenditure-to-revenue ratios are expected to nearly double this fiscal year. Meta’s ratio is projected to rise to 54.9% from 35.9%, Alphabet’s to 41% from 23%, Microsoft’s to 45% from 31%, and Amazon’s to 25% from 18%.