Big Tech Earnings Loom as AI Disruption Looms
Wall Street's attention shifts to Microsoft (MSFT) and Meta (META) as they announce their earnings today. Amidst the usual concerns about macroeconomic factors, a major industry shake-up is grabbing headlines: DeepSeek AI's AI model, DeepSeek-R1, claims to rival Silicon Valley giants' models at a fraction of the cost.
Investors are now scrutinizing Big Tech's response to this potential AI revolution. The question is not only how companies are leveraging their AI investments but also whether Nvidia (NVDA), the industry leader, is overvalued. Wall Street's recent sell-off wiped out billions from Nvidia's market cap.
However, some analysts see DeepSeek as a catalyst for industry growth. Bernstein analyst Stacy Rasgon believes it could lead to increased demand for AI technologies, while saving computing power for other applications.
Despite DeepSeek's claims, Truist Securities analyst William Stein raises doubts about the company's transparency on training costs and methodology.
Meanwhile, DeepSeek, like Meta, is offering open-source models, fostering innovation and competition in the AI space.
The onus is now on Silicon Valley's tech titans to address the industry's AI disruption and its implications for their businesses.