-$5.9 Billion

-$5.9 Billion

To follow up on my post a couple weeks back - “The Cash Flow Handoff”

Alphabet's free cash flow (what's left after a company covers its operations and its capital spending) turned negative last quarter, –$5.9 billion, the first time in the company's public history.

Total revenue grew 24%, Google Cloud revenue grew 82%, Google Cloud's order backlog reached $514 billion, and operating cash flow held at $39 billion. What changed is capital spending, which doubled to $44.9 billion in a single quarter, with full-year guidance now trending toward $205 billion.

Investors sold the stock on the news, treating the spending as a risk, but Alphabet owns the full AI stack, its own chips, its own models, and the cloud service that rents those models and chips out to businesses. It is investing that cash toward capacity it cannot build fast enough to meet demand, hence the $514 billion cloud order backlog.

Until next week,
Jacob

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