Google’s parent company reported a 16% surge in third-quarter revenue, with growth in its digital-advertising and cloud-computing units helping to finance robust artificial-intelligence spending.

Sales reached a record $102.3 billion for Google-parent Alphabet, ahead of analyst expectations, and net income was about $35 billion, a 33% increase over the same period a year ago.

Shares rose more than 6% in after-hours trading.

Like other large tech companies, Google is pouring tens of billions of dollars into AI development. It lifted its estimates for capital expenditures this year to a range of $91 billion to $93 billion, up from $52.5 billion in 2024.

The company said it expects a substantial increase in capital expenditures next year. Much of the money will be used to build data centers to develop and run AI models.

Google’s cloud division, which sells computing power to data centers, has grown as a result of the race to develop AI. The cloud unit had $15.2 billion in quarterly revenue, up 34% from the same quarter last year.

“We’re seeing AI now driving real business results across the company,” said Chief Executive Sundar Pichai.

Microsoft and Meta Platforms also reported quarterly results Wednesday. Amazon.com and Apple report earnings Thursday.

Google has been working to improve its AI model and chatbot, called Gemini, and adding AI features to a number of its products. Earlier this year, it changed its classic search engine to include “AI Mode,” which searches and responds in a chatbot-like exchange with fewer links.

The company said Wednesday that its Gemini app now has more than 650 million monthly users. Queries have tripled since the second quarter, it said.

Google’s search division faces competition from a host of AI startups including ChatGPT and Perplexity. Still, the company reported about $56.6 billion in search revenue, up nearly 15% from the same quarter last year.

Its YouTube unit brought in about $10.3 billion in revenue, up about 15% year over year.

Google for years has been working to cut costs to help fund its spending on AI.

YouTube this week told employees it plans to reorganize the unit’s leadership and offer voluntary severance for some U.S. employees, according to an internal memo. The memo was first reported by tech publication Sources.