Google parent company Alphabet has seen its business continue to grow in recent months, but rising spending on artificial intelligence (AI) infrastructure has put excess cash into negative territory.

The company’s free cash flow, the cash it held after paying for operations and investments, hit negative $5.9bn (£4.3bn) for the first time in at least a decade, according to its previous financial records.

Alphabet’s spending on AI is now expected to reach up to $205 billion this year, up from $190 billion, as major tech companies rush to build around a new wave of the technology.

Meanwhile, Alphabet’s combined quarterly revenue reached $119.8 billion, up 23% from the same period last year.

But the company’s shares fell 4% in after-hours trading.

Anat Ashkanazi, Google’s chief financial officer, noted in a call with financial analysts that the company had shown negative free cash flow due to increasing capital expenditures, all of which were essentially related to AI spending.

He said the company spent $45 billion in the second quarter, of which 60% of the cost was on servers and the remaining 40% on data centers.

Alphabet’s capital spending was $36 billion in the first quarter of this year.

Ashkanazi said on the call that when it comes to AI, “demand still outpaces investment.”

“As long as we see these attractive opportunities to invest, we will continue to invest.”

Sundar Pichai, Google’s chief executive, said the technological shift toward artificial intelligence tools and capabilities still “feels like the early innings of a shift in multiple areas” and that the company’s plans to generate financial returns on its spending were “disciplined.”

“What I see with respect to what can be done with cutting-edge capabilities is that there is still a lot of work to be done to translate it into experiences for our users. So these look like extraordinary opportunities with extraordinary returns.”

Tesla, the electric vehicle company controlled by Elon Musk, also reported negative free cash flow of $1.1 billion for the second quarter on Wednesday due to rising its own investment costs.

It was the company’s first negative showing of surplus cash in two years, according to its financial records.

Vaibhav Taneja, Tesla’s chief financial officer, said during a call with analysts that the company will spend up to $25 billion this year, more than double its capital spending in 2025.

He added that Tesla was in “a big investment cycle” and that its spending would likely increase even more over the next three years.

Tesla shares also fell 4% in after-hours trading.