Alphabet’s Shares Drop as Investors Wait for AI to Pay Off (1)

Alphabet Inc. shares fell after the Google parent sunk more resources into its drive to outmatch rivals in artificial intelligence, fueling spending higher than analysts expected.

Capital spending rose to $13.2 billion in the second quarter, supporting Google’s AI programs and computing power needs, the company said Tuesday. That exceeded analysts’ estimates of $12.2 billion.

Google once had a head start in the AI race because it developed much of the technology underpinning popular chatbots. Now, the company is under pressure to prove that it can withstand competition from the likes of OpenAI and Microsoft Corp. as they try to ...