Google turned negative on free cash flow for the first time, spending heavily on AI infrastructure. But the company still generates massive revenue from search, YouTube, and Cloud, and owns assets like Android, Chrome, and Waymo that give it unmatched distribution. The bet probably won't break them.
Google is doing something right now that is shocking to me because this is the first time that they're using up their free cash flow to win the AI race. Google is going negative on their free cash flow. By the way, they make a lot of money. It's not like they're starving for money. For the first time it's gone down. They started in 2004 and then they've continued to move up. My first reaction to this is, are they betting on the right thing? Now let's think about everything that Google has. Google has search, which is their moneymaking machine. Google also has— they have their TPUs. Google also has YouTube as well. Google also has Google Cloud. They have Android, so Android ecosystem, they have Chrome as well. And so they just have all the distribution in the world. They have Waymo as well. By the way, you think about some of the investments that they've made from Google Ventures, like they do pretty well there as well. And so all this data center investments, buildouts that they're doing right now, is it truly a risk at the end of the day to win this AI race? In my opinion, I don't think it's much of a risk because of how well they've done over the years.
