Big Tech may be breaking the bank for AI, but investors love it

Big Tech is spending more than ever on artificial intelligence – but the returns are rising too, and investors are buying in.

AI played a bigger role in driving demand across internet search, digital advertising and cloud computing in the April-June quarter, powering revenue growth at technology giants Microsoft, Meta, and Alphabet.

Betting that momentum will sustain, Microsoft and Alphabet decided to ramp up spending to ease capacity shortages that have limited their ability to meet soaring AI services demand, even after several quarters of…