United Kingdom, July 23 -- Alphabet, the parent company of Google, reported a surge in spending on artificial intelligence that has sent its free cash flow into negative territory, underscoring the immense financial demands of the AI race.

For the first time in at least ten years, Alphabet's leftover cash after operations and investments came in at negative $5.9bn (£4.3bn).

The company's combined quarterly revenue hit $119.8bn, up 23 per cent year-on-year, but investors were concerned about the high levels of AI expenditure, sending Alphabet's stock down four per cent in after-hours trading.

Chief Financial Officer Anat Ashkanazi explained that capital spending-essentially all AI-related-was the main driver of the negative cash fl...