In a series of recent earnings calls, tech giants Microsoft and Meta Platforms emphasized their ongoing commitment to investing heavily in artificial intelligence (AI), despite concerns stirred by China’s DeepSeek, a new AI startup that claims to have developed cutting-edge models at a fraction of the cost compared to US competitors.
Despite investor concerns following DeepSeek’s rise, which has shaken markets and raised doubts about the efficiency of current AI development practices, both Microsoft CEO Satya Nadella and Meta CEO Mark Zuckerberg expressed confidence in their companies’ AI strategies. They indicated that the competition, while notable, would ultimately help drive AI innovation and make the technology more affordable and accessible to a wider audience.
Meta has announced plans to invest between $60 billion and $65 billion in capital expenditures in 2025, reflecting its focus on AI infrastructure, including data centers and computing resources. This ambitious spending aims to support Meta’s goal of creating highly personalized AI experiences for its billions of global users across platforms like Facebook and Instagram. Zuckerberg underscored the importance of AI-driven content recommendation systems, which are expected to significantly enhance user engagement and drive advertising revenue.
During the earnings call, Zuckerberg also reiterated the company’s commitment to making AI an open-source standard. He expressed that this approach was vital for maintaining US leadership in AI, stating that the adoption of an “American standard” for AI would be crucial in the global race to dominate the sector. However, Zuckerberg acknowledged DeepSeek’s innovations, particularly the company’s ability to create an advanced AI model using fewer resources. While it was too early to fully assess the long-term implications of DeepSeek’s methods, Zuckerberg emphasized Meta’s strategy of integrating novel advancements where possible.
Microsoft, too, remains steadfast in its AI ambitions, with plans to spend around $80 billion on AI data centers in the current fiscal year. This commitment reflects the company’s confidence in AI’s potential to drive exponential demand as the technology becomes more efficient and widely accessible. Nadella reiterated that AI’s ongoing evolution is similar to the broader compute cycle, with efficiency improvements allowing more widespread adoption. He noted that as AI becomes cheaper to use, demand for the technology would soar, following the principle of Jevons Paradox.
Despite some challenges in its cloud-computing division, Microsoft’s investments in AI are expected to pay off as the company continues to partner with OpenAI. Nadella emphasized the scalability of Microsoft’s data center operations, describing them as a “fungible fleet,” capable of shifting between training models and running them globally. This flexibility is seen as a key advantage in meeting the diverse needs of clients across different industries.
The rise of DeepSeek has disrupted US tech stocks, particularly in AI hardware, with companies like Nvidia, which provides chips crucial for AI systems, experiencing market declines. DeepSeek’s claims of developing advanced AI models with lower costs have prompted investors to question the necessity of the massive capital expenditures that companies like Microsoft and Meta are making to support their AI initiatives.
While Microsoft and Meta both acknowledged DeepSeek’s innovations, they emphasized that their own investments in AI infrastructure remain a strategic advantage. Meta, for instance, believes that its large-scale capital expenditures will enable it to deliver superior AI services in the long term, with AI-powered systems designed for personalization playing a central role in its offerings.
With input from the Wall Street Journal, BBC, Fortune, and the Financial Times.
