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.

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.

The company increased that figure on Wednesday to $85 billion, saying it was raising it due to “strong and growing demand for our Cloud products and services.” The company expects to further increase capital expenditures in 2026, Alphabet finance chief Anat Ashkenazi said on an earnings call.

Most leaders in the tech industry owe their wealth to founding equity stakes in their platforms, which Google’s Sundar Pichai does not have.

JPMorgan Chase is an advertising partner of Motley Fool Money. Adam Spatacco has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Alphabet, Goldman Sachs Group, JPMorgan Chase, and Nvidia. The Motley Fool has a disclosure policy.

Alphabet is growing fast in core and cloud segments, though rising AI capex is pressuring free cash flow and returns. Learn why GOOGL stock is a buy.

Google parent Alphabet reported second-quarter revenue and profit that beat analysts' expectations, driven by rising cloud and search revenue.

We’ll continue investing in the people, talent and compute needed to make sure that we are set up for the opportunity ahead,” said CEO Sundar Pichai.

Search giant Alphabet strongly beat estimates for quarterly revenue and profit on the back of new AI features and a steady digital advertising market.

Alphabet was targeted with an EU antitrust complaint from six human and digital rights groups on Thursday which urged EU regulators to investigate whether the tech giant complies with legislation requiring it to make it easier for users to uninstall software apps.