Alphabet reported its largest quarterly profit in history as it increases spending on artificial intelligence infrastructure.
Alphabet reported a record quarterly profit of $112.1 billion for the three months ending in June, nearly four times the profit recorded a year earlier. However, approximately $77.1 billion of that total resulted from gains on investments rather than core business operations. The company is currently facing significant pressure from its aggressive push into artificial intelligence. Alphabet recorded its first negative free cash flow in 22 years as a public company, totaling $5.9 billion, due to surging costs for data centers and chips. Chief financial officer Anat Ashkenazi noted that the company is struggling to build enough capacity to meet high demand from Google Cloud customers. Investors reacted to the news by dropping Alphabet shares by nearly 7% after the company raised its 2026 capital project forecast to a midpoint of $205 billion. While revenue from search advertising and cloud services grew significantly, the high cost of maintaining a lead in the AI race remains a primary concern for shareholders.