Tag: AI Goldrush
The AI goldmine fails to produce in the AI goldrush
Here we go again.
Google admits AI search makes less money, but it’s fixing that with more ads Google’s negative cash flow balloons to -$9.06 billion, and stock price tumbles following Q3 earnings.
This is the consensus in the entire market right now.. Everyone is rushing for the precious AI and no one is checking the balance books. But google thinks they have an idea. Throw ads at it.
The company took in almost $128 billion in Q3 2026, earning more than $26 billion in net income. These may sound like good numbers, but financial markets are not impressed. While revenue is up 25 percent versus last year, net income is almost $9 billion lower. As of this story’s publication, the stock price is down almost 12 percent, and it was down about 13 percent earlier in the day.
The funny thing is google lost their way a long time ago.. about the time they dropped the “do no evil” part and they are paying for it each day. If google stuck by the “do no evil” they would of released an AI and not tried to make it a slopathon. The problem I am seeing here is every LLM is doing the same thing. Sam Altman and the rest of the CEOs are all turning into Smeagle on his way to turning into gollum.
Google is not slowing down—it’s only going to accelerate the shift toward more AI. Like last quarter, Google reported negative cash flow in Q3. The loss actually increased from -$5.8 billion to -$9.06 billion, a situation that is directly attributable to Google’s runaway AI spending. Google had capital expenditures of $51.4 billion in Q3 and says it still expects total 2026 spending to be between $195 billion and $205 billion. In 2027, Google is targeting more than $300 billion of AI investment.
The thing is with all conditions in the market, Google is taking a huge gamble with the market. Because of the market right now while the Dow is ok the market as a whole is starting to look like a wasteland. Banks are pulling back, Real estate is getting very stale in the residential sectors.
The company’s AI compute infrastructure doesn’t just power Gemini. Countless AI startups pay to run models on Google’s infrastructure. But even the larger AI firms are using venture cash to do it, and if that funding were to dry up, Google’s cloud revenues could go with it.
Where google is making some money is they are injecting there search into everything, it is to the point that you can not take a shit without AI being part of the deal. I’ve brought up the AI goldrush a lot on my site, the only reason google is not drowning is they are strip mining versus using a shovel and not only that they own the mine and the shovels being sold.
While Google’s investments ensure it still turns a profit, the trend of spending more than it earns on products and services (that negative cash flow) could come back to bite it. Search growth is declining, and Google is placing all its eggs in the AI basket.
Google though as much as it owns it is making the same mistakes as other llms and they bought the mine and the farm and never checked the soil so to speak so when it comes to AI it will hurt in the end when the bills come in.
Attributions from:
https://arstechnica.com/gadgets/2026/10/google-admits-ai-search-makes-less-money-but-its-fixing-that-with-more-ads/
META’s race to the bottom continues with overspending.
Meta said Monday it is planning to raise a total of $95 billion to support its investments in artificial intelligence infrastructure and superintelligence. The stock was down 1.6% in morning trading after the announcement. Nvidia, Advanced Micro Devices and Broadcom were interested in purchasing up to $5 billion in shares, Meta said in a statement. The tech giant will initially raise $35 billion in underwritten public equity offerings, before raising an additional $60 billion with an at-the-market program.
In the race to the bottom for nothing Meta is having a hold my beer moment and trying to sell its shirt for more precious AI.
The news comes as hyperscalers pour record sums into the AI infrastructure build-out. Goldman Sachs estimates that AI-related capital spending could total about $7.6 trillion from 2026 through 2031, across compute, data centers and power. Meta’s planned investments will support “emerging AI opportunities” including its family of apps, its AI agent Muse and its data center business, the company said Monday.
The spending for AI is getting so far over the top that when this crashes it will not be pretty. Because at this point everyone is trying to outbuild each other. Even though that AI makers are saying slow down its a game of poker where every LLM is trying to outbluff everyone else and no one really has the upper hand but Nvidia and Micron.
Meta is among the major hyperscalers that are increasingly tapping debt to fund the expensive infrastructure required for the AI boom. Last week, Meta posted third-quarter results showing revenue jumped 26% year on year: $64.60 billion versus the $63.37 billion analysts expected. However, investors focused more on the tech company’s negative free cash flow and its higher full-year capital expenditure forecast.
The thing is here more companies are carrying two ledgers and are moving debts to the hidden books. Companies are leveraging anything that is not locked down and they think that the AI gold rush is coming and selling a better shovel will access the AI gold faster.
In my belief I think there is a collapse coming, Whether it be like the 2008 Mortgage crisis or worse. Given that spending is massively out of control and the markets while they are going up it’s only a increase of what you see. There are massive failures building up in the shadows and many of the corporations while showing profits they are showing profits by shifting prices and cooking the books. While mortgage companies and banks are regulated the corporations are much less regulated and are right now doing everything they can to show a “profit”.
It now expects its full-year capex to range from $135 billion to $145 billion, raising the bottom of the range from $130 billion. That sent Meta’s shares lower on Thursday.
Given that they posted a 64.60 Billion profit and spending 135 billion is a MASSIVE mismatch in direction. Facebook has been dropping user engagement and Meta with Quest has been losing engagement as well has put their whole hog into the generative AI thinking it will create magic profits. Eventually this spending is going to catch up with meta and when the check is due who is going to pay for this. Especially with every company outspending any profit being made they can not expect the US to bail them out.
Alphabet, Google’s parent company, said it would look to raise $85 billion in June. SpaceX has closed a $40 billion debt financing to purchase graphics processing units. Anthropic is preparing for an initial public offering. TikTok U.S. is looking to secure multiple gigawatts of computing capacity over the coming years, CNBC reported Friday.
As more people are jumping into the AI gold rush there is a finite capacity and when this all ends there will be one AI mine and millions of shovels looking for profits.
From
CNBC – Meta announces $95 billion stock offering to fund AI expansion
Are the Tailings Ponds About to Burst in the AI Goldrush?
In a sign of the times Anthropic has listed a net loss of 80 BILLION with a b…
Anthropic’s net loss widened sharply to $80.7 billion in the first half of this year, in large part due to a rise in the fair value of bonds convertible into shares of the AI startup, according to a draft prospectus for a planned initial public offering that was reviewed by Reuters.
I have been steadfast in saying AI is a seriously overpriced commodity that has been nothing more than a goldrush. AI is just google search in a trench coat. And that the markets rush to stake a claim in the Gold rush era is much like the 1849 gold rush.
FINANCING COSTS
At an investor meeting on October 14, Anthropic told prospective IPO investors that its third-quarter revenue jumped 45% to $16.8 billion from the previous quarter, Reuters reported, citing people familiar with the matter.
While the figures eased some concerns about the enormous costs of developing AI systems, some investors were disappointed by the slowing sequential growth rate. Revenue had more than doubled from the first quarter to $11.6 billion in the second quarter.
The thing is here is this is only half the numbers, most LLMs have been pushing all CapEx expenditures to a second set of books and it makes these companies look better than they really are. When all of the loans come to be due it is going to be a financial bloodbath because what we are seeing is AI is not ready for the mainstream for constant use. The factor that AI has been a consistent loss leader and companies have no clue how to monetize it in a way that is not going to drive users off they are stuck with negative gains.
A cooler reception for Anthropic’s IPO could weigh on the wider AI market, whose near-term prospects investors see as hinging largely on the share sale’s success, ahead of rival OpenAI’s potential listing next year.
Reuters reported in September that Anthropic posted a net loss of $42 billion in 2025, with most of that stemming from a similar accounting charge. As Anthropic’s valuation climbed, the estimated fair value of those notes tripled year over year.
The thing is, investors they thought they had a slop generating gold shovel paradise and the new car smell of AI is wearing off. While LLMs are trying to say that AI will destroy the world and eat your firstborn and knock up your daughter … The fix still is a power switch in the end.
Attributions from:
reuters – Anthropic logged net loss of over $80 billion in first half of 2026
CoffeeCommander.net – Anthropic says they are profitable as long as you don’t check the inbox for bills.
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