Barclays sharply raised its capital expenditure forecast for Google following its Q2 earnings, projecting $350 billion in 2027 and $500 billion in 2028, both exceeding operating cash flow and resulting in negative free cash flow for two consecutive years. The primary driver is compute capacity demand for training the Gemini 4 large language model. Google currently spends approximately $1 billion per month leasing external GPUs, freeing up its own resources for model training. In Q2 2026, Google Cloud revenue reached $24.768 billion, up 82% year-over-year, with operating margin improving to 36%. Cloud backlog surged from $464 billion last quarter to $514 billion. Search ad revenue rose 17% year-over-year, while YouTube ad revenue growth accelerated to 13%. CFO Ruth Porat indicated that investments in AI infrastructure will continue to exert pressure on both the income statement and cash flows.