After Hours International: Google, Tesla Cash Flow Turns Negative! Are AI Giants Burning $1 Trillion Sending Alarm Bells? Experts Reveal New Stock Selection Script for Second Half

Global technology giants continue aggressively building data centers, securing GPUs, and expanding AI infrastructure. Yet, capital markets have begun asking a pressing real-world question: "When will the money spent actually be recouped?"

Rachel Chen, founder of Financial M Square, pointed out on the program 'After Hours International' that cloud giants such as Google, Amazon, and Microsoft continue to raise their capital expenditure forecasts. Initial market estimates for this year were around $750 billion, later revised upward to $800 billion. Including non-U.S. enterprises, global cloud providers’ capital spending could even exceed $1 trillion.

The problem lies in the fact that while spending continues to escalate, cash flow is beginning to sound alarm bells. Chen cited five major companies—Google, Amazon, Tesla, Meta, and Microsoft—and noted that three of them saw negative operating cash flow in Q2. Google, in particular, turned negative by $5.58 billion, prompting market concerns that these tech titans may be shifting from being companies that “have money to burn on AI” to ones that are “running short on cash because of AI.” If cash flow pressure persists, it could eventually impact capital expenditure.

The market no longer rewards simply “spending boldly,” but demands proof of profitability.

This explains why, despite recent announcements of expanded AI investments, tech stocks aren't always receiving positive reactions. In the past, when CSP (Cloud Service Provider) giants announced new data center construction, investors would immediately buy semiconductor, server, power, and cooling-related stocks. Now, however, investors are asking a different question: “Are these expenditures ‘forward investments anticipating future demand,’ or are companies collectively trapped in an AI arms race that no one dares to exit?”

Host Lu Yi-Zhen put it in the simplest terms: “Even an elementary school student deciding whether to spend $10 first considers if they can earn back $12.” Yet, facing trillion-dollar AI capital outlays, tech giants still struggle to clearly answer how their spending will translate into returns. Market volatility stems not from disbelief in AI demand, but from uncertainty over whether that demand can generate sufficient revenue to cover massive capital expenditures.

(Image provided by Supermicro)

Chen highlighted that Financial M Square’s tracked “AI Monetization Coverage Ratio” actually improved in Q2 compared to Q1. While large tech firms are indeed spending rapidly today, the existence of backlog orders and RPO (Remaining Performance Obligations) extending into 2026–2027 indicates companies aren’t blind to future revenues—they’re spending today’s money to bet on tomorrow’s demand.

The real risk isn’t that AI “suddenly becomes zero,” but that monetization speed fails to keep pace with capital spending. As long as revenue growth lags behind the costs of building data centers, buying GPUs, and expanding power infrastructure, markets will increasingly demand accountability each quarter. Especially when companies begin raising funds via bond issuance, investors must monitor not only AI revenue but also corporate bond yields and financing costs. Chen noted that giants like Google, Microsoft, and Amazon have already started fundraising, marking a key signal to watch in the next phase.

Chen predicts a significant shift in investment narratives by the second half of 2026. Previously, markets reacted positively to signs like “increased capex,” “AI price hikes,” or “CSP expansion.” Going forward, capital may favor companies with strong cash flow, rising gross margins, growing profits, and proven AI-to-revenue conversion—because the market is losing patience with firms that merely “keep spending.”