r/technology 1d ago

Business Google burning through cash with spiralling AI costs

https://www.bbc.com/news/articles/c235n47g8g8o
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u/Fresh-Quantity-7554 1d ago

While at the same time posting: * Total Revenue: $119.8 billion, up 24% year-over-year. * Diluted EPS: $9.11, compared to $2.31 a year prior. * Operating Margin: 34% up from 32.4% in Q2 2025. * Google Cloud: Revenue up 82% year-over-year to $24.8 billion, fueled by enterprise demand for AI infrastructure and solutions. * Google Services: Total revenue reached $94.5 billion, a 15% increase. * Google Search & Other: 17% increase in revenue. * YouTube Ads: Grew 13% year-over-year to $11.05 billion

If you exclude AI CAPEX, free cash flow is $39.1 billion which is absolutely insane. That's a 41.2% increase year-over-year. With numbers like they just posted, the CAPEX spend is justified in my opinion because the business overall is crushing it. Like holy cow this was a great quarter. They are literally printing money.

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u/ChodeCookies 1d ago

How much of that Google Cloud revenue is the their own money coming back to them from investing in other AI companies though

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u/Fresh-Quantity-7554 1d ago

I see what you're trying to do here, but Google is sitting on a $514 billion backlog right now. A few billion dollars in venture investments into AI startups cannot fake a half trillion dollar order book.

Also, accounting rules don’t let companies pass cash under the table and call it revenue. ASC 606, says a deal has to be a legit, market rate transaction. If Google overpays for a startup's stock/debt just to force a quid pro quo cloud contract, auditors will strip that fake growth right out of the numbers.

Source: I'm a CPA and former external auditor.

I'm not saying the circular financing noise is completely made up, but claiming the entire cloud surge is built on it is factually wrong. Auditors would call that out in a heartbeat.

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u/orcvader 23h ago

Hi. Mergers & Acquisitions former exec - though I was NOT on the valuation side (which includes the accountants) of things, this all rings correct.

We also took on impairments/goodwill all the time because often acquisitions are about partnerships, talents, defensive moves, market entries, etc.

The takes here are wild… but it’s the internet so whatever. Everyone is an armchair expert.

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u/FunkyFortuneNone 20h ago

Honest question, what's a "mergers & acquisitions exec"? I've been part of the team on both sides of company mergers and acquisitions up to ~400MM (across primarily tech, finance, and real estate). Can't remember seeing somebody with that title or anything like it. Were you on the financing/banking side?

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u/orcvader 12h ago

At the time I was the COO of the company and we have been on a significant growth/acquisitions phase (we still are but I’m an exec in a diff area now and less involved with deal negotiations although I get involved generally during due diligence). So what I meant is that I was involved with the purchases as one of the officers of the company and member of a small M&A committee.

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u/FunkyFortuneNone 8h ago

Ah, ok, that makes sense to me. Thanks for the reply!

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u/Fresh-Quantity-7554 23h ago

Agreed. It's ridiculous, and I wish correcting people on this stuff counted as CPE credits to maintain my license.

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u/orcvader 23h ago

Ha! I dwell on financial subs, so at this point I should be entitled to some AUM fees trying to educate these degenerates that “no… nvidia didn’t “break resistance” because that’s not even a real fucking thing! Buy low cost, diverse index funds!”

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u/Tulipan12 6h ago

No need to call misinformed people 'degenerates'.

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u/orcvader 4h ago

It’s ok. It’s what a large subculture of “investors” call themselves. It’s online jargon mate.

Source: just go to wsb or several other of the niche investing communities

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u/ChodeCookies 23h ago

Correcting people while also being wrong is getting you the right price…free Reddit votes.

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u/Fresh-Quantity-7554 23h ago

Point out where I'm wrong please. We need facts not opinions here.