Wednesday’s report follows Alphabet’s better-than-expected Q1 release earlier this year, in which the company reported year-over-year growth of 12% and 49% for its top and bottom lines, respectively, after Google’s search unit generated more in sales than analysts projected.

The search giant predicted a further capital spending boost next year and cited massive demand for its cloud computing services.

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.