This Key Metric for Amazon and Alphabet Will Take a Huge Hit in 2026 Thanks to Massive AI Spending. Here's What It Means for Investors.

Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) shocked investors erstwhile they announced their AI spending plans for 2026. Alphabet went first, telling investors it would walk betwixt $175 cardinal and $185 cardinal this twelvemonth connected superior expenditures. Not to beryllium outdone, Amazon said it would walk astir $200 cardinal this year.

Both companies are investing heavy to support up with increasing request for compute powerfulness among artificial quality developers, including their ain AI projects. Management teams astatine each institution noted that their unreality computing operations stay proviso constrained, further evidenced by their increasing contracted backlogs.

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But the monolithic increases successful currency spending for some companies volition enactment unit connected a precise important metric utilized to way their fiscal health. Here's what investors request to know.

The large leap successful superior expenditures volition mean that some tech giants could spot escaped currency travel diminution to adjacent to $0, oregon adjacent spell negative, successful 2026. That's well-trodden territory for Amazon, which is utilized to investing immense sums to physique retired its logistics network. Alphabet, connected the different hand, has ne'er produced antagonistic currency travel for a afloat twelvemonth since going public.

Alphabet whitethorn inactive debar antagonistic escaped currency travel successful 2026. It produced $165 cardinal successful operating currency travel successful 2025, and that fig is increasing rapidly arsenic it continues to standard its unreality computing business. Its halfway Google hunt concern has besides produced respectable gross growth. If Alphabet sticks to its budget, it should beryllium capable to eke retired affirmative escaped currency travel for the year.

The institution ended the twelvemonth with $127 cardinal successful currency equivalents and marketable securities connected its equilibrium sheet. Still, absorption has opted to pat the indebtedness marketplace for $32 cardinal to money its information halfway buildout. The institution already added $36 cardinal successful semipermanent indebtedness to its equilibrium expanse successful 2025, ending the twelvemonth with $47 cardinal total.

Amazon, meanwhile, is improbable to debar going into the reddish connected its escaped currency flow. Its operating currency travel of $140 cardinal isn't increasing arsenic accelerated arsenic Alphabet's. It should spot a measurement up adjacent twelvemonth arsenic it shows beardown borderline enlargement for its retail concern and its unreality computing gross is erstwhile again accelerating. Still, it's improbable to acquisition the 43% maturation successful operating currency travel indispensable to screen its planned $200 cardinal successful superior expenditures.