DeepSeek Spurs AI Infrastructure Debate Among Big Tech
Wall Street
On Monday, DeepSeek's advancements sparked market volatility, with Nvidia's (NVDA) shares plummeting over 17%. Concerns arose about potential overspending on AI infrastructure by Microsoft (MSFT) and Meta (META).
Earnings Call Response
However, Microsoft and Meta's earnings calls on Wednesday painted a different picture. Despite acknowledging DeepSeek's AI model efficiency improvements, both CEOs emphasized the eventual benefits to their companies.
Microsoft CEO Satya Nadella
"AI will become more ubiquitous due to this optimization," said Nadella. "As a hyperscaler and PC platform provider, this is positive news for us."
Meta CEO Mark Zuckerberg
Zuckerberg downplayed DeepSeek's threat, stating that the industry is dynamic and that DeepSeek's announcement is part of its evolution. He also expressed Meta's intention to learn from DeepSeek's advancements.
Industry Implications
DeepSeek's claims of training its AI model for $5 million using less advanced chips raised questions about US tech companies' competitiveness and AI infrastructure spending.
Analyst Criticism
However, analysts have questioned DeepSeek's cost estimations, as it excludes prior research and experimentation expenses. They also criticize the use of distillation, a technique that relies on larger models for training.
Meta's Outlook
Zuckerberg remains cautious about reducing AI infrastructure investments based on DeepSeek's data. He believes that Meta's data centers will support AI models requiring significant computing power for precise responses.
Microsoft's Strategy
Nadella highlighted Microsoft's scalable data center infrastructure, emphasizing its long-term benefits.
Upcoming Earnings Reports
Apple (AAPL) and Intel (INTC) will report earnings on Thursday, followed by Google (GOOG) on February 4th and Amazon (AMZN) on February 6th. These companies are expected to address the ongoing AI advancements and their implications.