DeepSeek's AI Announcement Raises Questions for Big Tech's AI Infrastructure Investments

On Monday, DeepSeek sent shockwaves through Wall Street, causing Nvidia (NVDA) shares to plummet over 17% and casting doubts on the excessive spending of tech giants like Microsoft (MSFT) and Meta (META) on their own AI infrastructure development.

However, during Wednesday night's earnings calls, executives from Microsoft and Meta conveyed a more optimistic outlook. Both CEOs acknowledged DeepSeek's AI efficiency improvements while emphasizing that the advancement would ultimately benefit their own companies.

"This optimization will lead to widespread AI adoption," said Microsoft CEO Satya Nadella. "As a hyperscaler and PC platform provider, we welcome this news."

Meta CEO Mark Zuckerberg downplayed DeepSeek's threat, stating that the industry constantly evolves and DeepSeek's announcement is part of that cycle. Zuckerberg remained enthusiastic about incorporating DeepSeek's innovations into Meta's systems and emphasized the importance of investing in AI infrastructure.

"Every innovative company brings advancements, and the industry learns from them," he said. "That's the nature of technology."

DeepSeek's claims had initially sparked concerns about Chinese rivals outpacing US companies in AI development and the need for excessive expenditure on AI infrastructure. However, analysts have questioned DeepSeek's reported $5 million training cost, excluding prior research expenses. They also criticized the use of distillation in model development.

Despite these concerns, Zuckerberg expressed caution in adjusting Meta's AI infrastructure investments based on DeepSeek's data. Meta plans to invest over $65 billion in AI infrastructure this year, aiming to enhance service quality and scale.

Nadella emphasized the long-term benefits of Microsoft's data center investments, highlighting that the infrastructure supports the company's scalability. Microsoft has allocated $80 billion for its AI buildout through fiscal 2025.

Big Tech earnings calls for Apple (AAPL), Intel (INTC), Google (GOOG), and Amazon (AMZN) are expected to further reveal industry perspectives on the AI shake-up.