Google Stock Crashes 11% as $51 Billion AI Spending Pushes Cash Flow Below Zero

Key takeaways

• Google stock plunges despite record cloud revenue growth
• Alphabet reports second consecutive negative free cash flow
• Company raises $41 billion through debt and shares

Google parent Alphabet saw its shares plunge approximately 11% on Thursday, October 29, after reporting an unexpected cash-flow deficit despite delivering strong revenue growth across its advertising and cloud businesses.

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The company generated $127.6 billion in third-quarter revenue, up 25% year over year, while Google Cloud sales more than doubled to $30.7 billion. However, capital expenditures surged to $51.4 billion, pushing free cash flow to negative $9.1 billion.

According to Alphabet's third-quarter financial results, the company also raised approximately $41.1 billion through debt and equity issuance during the quarter.

Alphabet's $51 Billion AI Spending Creates Another Cash Deficit

Alphabet generated $42.29 billion in operating cash flow during the quarter but spent $51.36 billion purchasing property and equipment.

That produced negative free cash flow of $9.07 billion, compared with a $5.86 billion deficit in the second quarter.

The deterioration is particularly notable because Alphabet historically generated substantial cash from Google Search, YouTube and its advertising business.

Despite the cash shortfall, Alphabet remained profitable, reporting $40.6 billion in operating income and $26.2 billion in net income.

That distinction matters: negative free cash flow does not mean the company is losing money across its operations.

The latest results follow Coinpaper's earlier earnings coverage, which examined Wall Street's initial reaction to the spending surge.

However, the financing implications extend beyond a disappointing quarterly report.

Google Raises $41 Billion as Cloud Revenue Doubles

Alphabet issued $28.7 billion in senior unsecured debt during the third quarter, alongside approximately $12.4 billion in proceeds from selling Class A and Class C shares.

The combined $41.1 billion raised represents a significant change in how the technology giant is financing expansion.

It does not mean Alphabet borrowed that amount solely to cover its quarterly cash deficit. The proceeds support general corporate purposes, while the company retains substantial cash and investment holdings.

Meanwhile, Google Cloud revenue increased 103% to $30.7 billion, while operating profit surged from $3.6 billion to $11.1 billion.

The division's impressive results reinforce the demand outlined in Coinpaper's AI spending outlook, which examined nearly $600 billion in potential investment across three major technology companies.

Still, Alphabet's accelerating expenses demonstrate why cloud growth alone cannot settle questions about financial returns.

Similar concerns have emerged across the broader industry, where companies raised approximately $466 billion in AI-related debt during the first nine months of 2026.

Google Stock Faces Another Test as 2027 Spending Set to Rise

Alphabet maintained its 2026 capital expenditure forecast of $195 billion–$205 billion and warned that spending would increase significantly in 2027.

The company did not disclose a specific target for next year.

Higher investment is intended to support AI infrastructure, data centers and Google's expanding cloud services, including its custom tensor processing units.

However, expensive hardware brings questions about depreciation and financing costs. Those risks have also influenced the debate over GPU-backed borrowing across the AI industry.

Meanwhile, Alphabet's search advertising business remains under scrutiny.

Google advertising revenue reached $82 billion, missing analysts' expectations of approximately $83.5 billion, while Search growth slowed despite increasing AI-related queries.

The combination of weaker-than-expected advertising revenue and rising infrastructure expenses helps explain why investors reacted so negatively to otherwise impressive cloud growth.

The broader AI debt concerns have already influenced credit markets, making cash generation an increasingly important measure of technology companies' financial strength.