Tech Giants' Artificial Intelligence Investments Drain Cash Flow

Amazon, Microsoft, Google, and Meta have engaged in record-breaking spending in the artificial intelligence infrastructure race, causing their free cash flows to turn negative and sparking concern on Wall Street.

Amazon has become the latest technology company to increase its artificial intelligence investments despite falling share prices. Posting record spending in the last quarter, Amazon, Microsoft, Google, and Meta are on track to spend over $720 billion this year for data centers and other capital expenditures; this figure corresponds to approximately three times the spending from two years ago. This intense wave of spending has driven companies to seek funding through borrowing and share sales.

According to data released on Thursday, Amazon's quarterly sales reached $201.9 billion and its profit was $20.7 billion, while capital expenditures exceeded $75 billion and free cash flow dropped to minus $42.4 billion, primarily due to artificial intelligence investments. Google's parent company Alphabet also reported negative free cash flow for the second consecutive quarter, with capital expenditures more than doubling to reach $51 billion. Meta announced plans to raise up to $95 billion in revenue through stock sales while reporting negative free cash flow, and secured a $40 billion loan through SpaceX. Meanwhile, Microsoft reported $92.3 billion in revenue and $36.6 billion in profit, increasing its capital expenditures by 30 percent to $45.2 billion; planning to raise $25 billion through a bond issuance, the company managed to maintain positive free cash flow.