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.

Google’s parent company said 2025 capital expenditures will be $85 billion, or $10 billion greater than an earlier forecast. Although Alphabet beat expectations for second-quarter revenue and profit, its stock initially sank in after-hours trading, then rebounded after Chief Executive Officer Sundar Pichai explained that the investments are necessary in order to keep up with customer needs. “Our AI infrastructure investments are crucial to meeting the growth in demand from cloud customers,” he said on a call Wednesday following the report.