Google's parent company Alphabet has seen its spending on artificial intelligence (AI) infrastructure skyrocket to nearly $205bn this year, dwarfing its free cash flow and sending shares tumbling.

The tech giant’s financial analysts noted that despite the substantial investment in AI, demand still outpaces current investments. However, the surge in costs has left investors concerned about the immediate financial impact on the company's bottom line.

Meanwhile, Tesla reported its first negative free cash flow since 2021 due to increased spending on its electric vehicle production and other ventures, reflecting a broader trend of tech companies prioritising future growth over short-term profits.

The unprecedented scale of these investments highlights the race among major tech firms to dominate the burgeoning AI landscape. But with high costs come questions about whether users will see tangible benefits or face higher prices in the long run.