US AI Giants' Capex Expansion Sends Free Cash Flow Negative, Google and META Shares Drop
Since late 2025, leading cloud vendors have seen free cash flow turn negative, intensifying market concerns over the sustainability of AI capital spending. In 2026, the market's prior pricing logic—where capex increases boosted shares—has shifted as leverage and liquidity strains push investors to scrutinize financing and cash flow. After second-quarter earnings revealed compressed free cash flow alongside higher guidance, Google and META shares fell, signaling a move from unconditional support to rigorous appraisal of AI returns.
Since late 2025, leading cloud vendors have seen their free cash flow turn negative, and market concerns about the sustainability of AI capital expenditure have gradually intensified. Previously, market pricing of AI was centered on capital expenditure expansion, with upward revisions to capex guidance typically driving share prices higher. But entering 2026, this dynamic has changed: corporate leverage has increased, liquidity has tightened, and investors have begun to focus more on financing and cash flow constraints.
Taking the second-quarter 2026 earnings as an example, some technology giants raised their capex guidance while their free cash flow contracted significantly, prompting questions about the monetization of cloud and computing assets. Following these earnings releases, the shares of the companies concerned declined, with Google and META among those most visibly affected. This shift indicates that the market's attitude toward AI capital expenditure has moved from unconditional support to rigorous scrutiny of returns and cash flow performance, elevating the importance of AI financing sustainability and risk factors.