Big Tech Reacts to DeepSeek AI Shakeup: Investment Commitments Remain Amid Stock Sell-Off

In recent weeks, several prominent tech companies have reported quarterly earnings, including six of the "Magnificent 7" firms. These earnings releases come shortly after Chinese AI startup DeepSeek made waves in the stock market, with investors viewing its new, inexpensive AI models as a potential threat to US tech stocks.

DeepSeek's innovations have caused significant concern within the US tech industry, leading Nvidia (NVDA) to lose $600 billion in market capitalization in a single day – the largest loss in stock market history. This loss stems from investor concerns that Big Tech would reduce spending on AI hardware.

In response to this development, US lawmakers are reportedly considering banning the DeepSeek app from government-owned devices, according to the Wall Street Journal.

During earnings calls with investors, executives from these firms responded to the DeepSeek news with varying degrees of concern and excitement. While most agreed that DeepSeek's innovations indicate a future decline in AI costs, they reaffirmed their commitments to investing heavily in capital expenditures and AI infrastructure, despite uncertainty about the timeframe for these investments to yield returns.

Microsoft (MSFT)

Microsoft CEO Satya Nadella embraced DeepSeek, mentioning the firm in his opening remarks on a post-earnings call on January 29. Nadella highlighted Microsoft's collaboration with DeepSeek to integrate its AI model into Azure AI Foundry and GitHub. He emphasized that DeepSeek's model underwent rigorous security evaluations before being released.

Nadella expressed optimism about the commoditization of AI, stating that it benefits Microsoft as a hyperscaler and PC platform provider.

Meta (META)

Meta, widely seen as well-suited to capitalize on generative AI due to its advertising business, experienced a stock surge following DeepSeek's debut. CEO Mark Zuckerberg, however, remained relatively nonchalant about DeepSeek's potential impact on Meta's capital expenditures.

Zuckerberg acknowledged the competitive nature of DeepSeek, noting that the company is working to establish its open-source Llama AI models as a global standard. He emphasized the importance of a US-developed standard from a national advantage perspective.

Apple (AAPL)

Asked for his perspective on DeepSeek, Apple CEO Tim Cook stated that innovation that drives efficiency is positive. He also noted that Apple takes a cautious approach to expenditure. Apple shares rose by over 3% on the day DeepSeek released its latest AI model.

Google (GOOG)

Google CEO Sundar Pichai expressed confidence in Google's AI offerings, claiming that Gemini Flash models are superior to DeepSeek's. He attributed this superiority to Google's full-stack development capabilities and cost-efficiency.

Pichai emphasized that lower AI costs will increase the feasibility of new use cases, making him optimistic about the future of AI technology.

Amazon (AMZN)

Amazon CEO Andy Jassy dismissed concerns that DeepSeek's models would lead to a decline in AI investment. He pointed to Amazon's previous experience with cloud infrastructure development, where costs decreased without leading to reduced spending.

Despite these assertions, Amazon's stock dropped by 4% following the company's announcement of a 35% increase in capital expenditures, exceeding $100 billion.

Advanced Micro Devices (AMD)

AMD CEO Lisa Su expressed optimism about the potential for DeepSeek's innovations to accelerate AI adoption, citing the recently announced $500 billion Stargate AI infrastructure project backed by SoftBank, Oracle, and OpenAI.

Qualcomm (QCOM)

Qualcomm CEO Cristiano Amon enthusiastically welcomed DeepSeek's advancements, arguing that they could expedite the proliferation of AI-powered smartphones and PCs. He emphasized the shift towards on-device AI inference, which would increase demand for Qualcomm platforms.

Arm (ARM)

Arm CEO Rene Haas asserted that lower-cost AI would benefit device manufacturers, particularly in the development of consumer-oriented products. He took a veiled swipe at Nvidia by stating that Arm's chip architecture is suitable for applications where Nvidia's offerings are not.