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.

Though Google Cloud is dominating headlines for its surprising outperformance, Alphabet’s core ad business remains robust. Google Search brought in revenue of $54.19 billion for the quarter, growing 12% year over year, while YouTube Ads revenue jumped 13% to $9.8.