GoKawiilOpenAI's release of ChatGPT in late 2022 kicked off the ongoing AI investment race, and every major tech company has since launched a consumer-facing AI chatbot of their own. Meta has Meta AI, Google has Gemini. Amazon has Rufus. Apple even relaunched Siri.
Yet, none of the chatbots or the related tools in and of themselves clearly provide a meaningful amount of revenue for the companies, despite being costly to create.
Instead, this batch of earnings results made clear that companies like Google, which is owned by Alphabet, and Meta are currently spending much more money related to AI tools than they bring in.
Both companies reported some of their lowest ever amounts of free cash flow, a measure of how much money a business has left over after paying for operations and investments.
Google spent so much money on AI that Alphabet's free cash flow was negative on revenue of $118bn, meaning it spent more than it brought in for the first time in the company's history as a public company.
Meta's free cash was just $784m on $61bn of revenue, meaning it spent almost as much money as it made during the quarter.
Meta's Reality Labs, which is responsible for its AI work, lost nearly $9bn in the first half of this year.