US$5.9 Billion Burned in Just 3 Months: Tech Giants Stagger Under AI Spending Spree

Technology giants are increasingly aggressive in deploying ‘ammunition’ to develop advanced artificial intelligence (AI) systems. The massive capital expenditure is now making investors nervous, prompting questions about the future scheme for returns and profits. A record cash outflow from Alphabet (Google) has shocked investors awaiting performance reports from other tech giants next week. The surge in AI development spending has burdened one of the world’s most profitable companies, and the load is expected to grow. Google’s parent company reportedly ‘burned’ through US$5.9 billion (Rp106 trillion) during the second quarter (Q2) of 2026. This massive expenditure was recorded even as its cloud services unit posted record growth of 82%. Alphabet’s cloud business involves leasing AI computing power. The impact on the cash position is one of the clearest indicators of how AI is reshaping Big Tech companies, a group previously known for huge profit margins and abundant cash flow that easily funded new initiatives. However, since the AI race intensified, Big Tech is now relying on debt and share sales to finance their spending. Big Tech debt is estimated to surpass US$700 billion (Rp12,579 trillion) this year due to insufficient internal cash flow. This situation will trigger sharper scrutiny when Microsoft, Meta Platforms, and Amazon report their financial performance next week. Alphabet shares fell about 6% in early trading on Thursday (23/7), while Meta and Amazon shares each dropped around 3.5%. Microsoft shares were largely unchanged. The share price decline reflects investor concerns that other tech giants will likely follow Alphabet’s lead by raising spending projections, even though the returns on these investments still lag behind the scale of the outlays. ‘The risk tends to point towards further increases, especially as long as Microsoft and other companies are still constrained by capacity issues,’ said Charu Chanana, head of investment strategy at Saxo Markets. ‘However, investors will increasingly scrutinise how much cash must be reinvested to maintain competitiveness. Moreover, whether AI revenue can grow faster than capital expenditure, depreciation, and operational costs,’ she added. Analysts expect Alphabet and Amazon to spend a lot of 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 ratio is expected to nearly double this fiscal year. Meta’s ratio is estimated 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%.