Alphabet Q2 Free Cash Flow Negative $4.5B, Stock Slides 13%

Alphabet posted a negative free cash flow of $4.5 billion for the quarter ending March 31, a stark reversal from the $0.9 billion positive FCF in Q1. The stock opened at ₹5,350, fell 13% to ₹4,660 before a late‑afternoon rally that left it hovering just below ₹5,200.

Analysts had expected a $0.2 billion outflow, so the miss was 4.5× larger than projections. The 13% slide is the steepest intraday dip since Alphabet’s IPO in 2004, wiping roughly ₹3.4 trillion of market value in a single day.

The negative cash flow stems from a $300 billion capex plan for 2027 and an aggressive investment in AI hardware, which has pushed operating expenses to a 27% margin, down from 31% YoY. Alphabet’s free cash flow fell 45% YoY, while revenue rose 12% to ₹1.2 trillion.

The company will report Q3 earnings on May 15, with guidance for a 3% revenue growth and a $350 billion capex target. Investors will test whether the AI‑driven strategy can translate into profitability, as peers like Meta and Amazon also posted negative FCF this quarter.

Sector analysts remain cautious, noting that while AI investments may pay off long term, the current cash burn raises liquidity concerns. If the company can keep capex on track, the share price may regain momentum ahead of the upcoming earnings season.