Microsoft, Meta Defend AI Spending After DeepSeek Disruption
In the wake of DeepSeek's AI breakthrough, Microsoft and Meta executives have defended their substantial investments in the field, emphasizing their strategic importance.
U.S. Lead Challenged
DeepSeek's advancements have cast doubt on America's AI dominance, offering models at a fraction of the cost. However, U.S. tech giants maintain that massive computing networks are crucial to meet growing enterprise needs.
Meta and Microsoft's Investments
Meta has pledged $65 billion towards AI, while Microsoft has allocated $80 billion for fiscal 2023. These investments contrast with DeepSeek's reported spend of $6 million on AI development.
Investor Concerns and Analyst Commentary
Despite the investments, some investors express impatience for tangible returns. Microsoft shares dropped after projecting lower Azure growth. Analysts suggest that AI capital expenditures exceed consumption, requiring a shift in strategy.
CFO's Capital Outlook
Microsoft's CFO, Amy Hood, indicated that current quarter capital spending will remain at Q2 levels. While strong demand signals warrant continued investment, the growth rate will decline in fiscal 2026.