AI Spending Boom Continues, Despite DeepSeek Concerns
The emergence of DeepSeek, an AI model from China, raised concerns among investors about the potential slowdown in AI spending. However, recent earnings reports from major technology companies suggest that AI investment remains robust.
Alphabet, Microsoft, Meta Announce Capital Expenditure Boost
Alphabet (GOOGL, GOOG) plans to invest $75 billion in capital expenditure in 2025, exceeding analyst estimates of $57.9 billion. Alphabet, Meta (META), and Microsoft (MSFT) are expected to collectively spend $228 billion in 2025, a 55% increase from 2024.
Nvidia Shares Rise on Strong AI Demand
Nvidia (NVDA), a leading supplier of AI chips to Alphabet, saw its shares rise over 4% on Wednesday. Bank of America analyst Vivek Arya reaffirmed his Buy rating on NVDA, citing solid cloud capex intentions. Despite DeepSeek's potential optimizations, Nvidia customers, including Microsoft and Meta, have not altered their spending plans.
AMD's Pullback Seen as Short-Term Headwind
AMD (AMD) shares declined by 7% after investors expressed disappointment with its data center business outlook. However, Stifel analyst Ruben Roy believes AMD's pullback is a company-specific issue. Long-term demand for both Nvidia and AMD's chips remains strong, fueled by continued hyperscaler spending on AI infrastructure.