Alphabet Inc. said demand for artificial intelligence products boosted quarterly sales, and now requires an extreme increase in capital spending — heightening pressure on the company to justify the cost of keeping up in the AI race.

Alphabet shares rose more than 3% in early trading on Thursday as the Google parent's earnings underscored a key message to investors: AI spending is climbing, but so are the returns.

Seemingly, everyone is developing AI agents and deploying AI solutions to reshape businesses. ChatGPT’s success has spawned AI chatbots from Alphabet (Gemini), Amazon (via Anthropic’s Claude), Meta Platforms (Llama), and Elon Musk’s xAI (Grok), among others.