Alphabet’s CFO signals AI spending could top $300 billion as cash flow turns negative

Alphabet is spending money faster than it makes it.

The Google parent’s third-quarter 2026 results showed negative free cash flow of $9.1 billion. It was the second consecutive quarter in the red, a first for Alphabet since it went public more than two decades ago. Investors responded about as warmly as you would expect.

The numbers behind the selloff

Alphabet reported its quarterly earnings on October 28, 2026. Revenue came in at $127.6 billion, below what analysts had expected.

Capital expenditures hit a record $51.4 billion for the quarter. Most of that went into AI compute, meaning the data centers, chips and supporting gear needed to train and run large models.

The quarter also brought a miss on search revenue, the company’s core business. Alphabet reportedly missed on both the top and bottom lines for the first time in nearly four years.

Shares were reportedly down 10% or more in intraday and after-hours trading following the release.

The CFO’s spending roadmap

Alphabet kept its full-year 2026 capital spending guidance at $195 billion to $205 billion.

CFO Anat Ashkenazi signaled during the earnings call that spending could rise significantly in 2027, potentially exceeding $300 billion.

Alphabet disclosed future purchase commitments exceeding $1 trillion. That total includes $924 billion in infrastructure and energy obligations and $152 billion in leases.

The company also paused share buybacks in 2026 and has been raising debt and equity instead.

A bright spot in the cloud

Not everything in the report pointed down. Google Cloud posted robust year-over-year revenue growth, which the company attributed to demand for AI services.

What this means for investors

The revenue miss complicates Alphabet’s pitch on AI spending. It suggests that heavy AI investment is not yet producing proportional returns at the top line, even as Cloud grows quickly.

The shift from buybacks to debt and equity raising is another signal worth watching. Issuing equity dilutes existing shareholders, and adding debt raises fixed obligations.

Several things are worth tracking from here. The first is whether Alphabet’s fourth-quarter capex climbs further, as the company has suggested it could. The second is whether search revenue stabilizes. The third is Google Cloud’s growth rate. Finally, watch how Alphabet frames 2027 guidance as it firms up. A figure above $300 billion would put the company’s annual infrastructure budget in rarefied territory. Ashkenazi has set expectations high on spending. The next few quarters will show whether the revenue side can keep pace.