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 hyperscaler wars are still raging despite concern earlier this year that cloud network players, including Alphabet, Amazon, and Microsoft, may cut capital spending on AI infrastructure. Concerns that surging spending to refresh and build out cloud networks accelerated when China’s DeepSeek chatbot launched with a shockingly low $6 million development cost,