Despite recent shockwaves sent through the tech industry by Chinese AI startup DeepSeek, Microsoft and Meta CEOs have defended their companies’ massive investments in artificial intelligence (AI). DeepSeek’s claims of achieving comparable AI performance at a fraction of the cost have raised questions about the sustainability of big tech’s AI spending strategies.
In their respective post-earnings calls on Wednesday, both Satya Nadella of Microsoft and Mark Zuckerberg of Meta emphasised the strategic importance of investing heavily in AI infrastructure.
“Investing ‘very heavily’ in capital expenditure and infrastructure is going to be a strategic advantage over time,” Zuckerberg said on a post-earnings call.
Nadella echoed Zuckerberg’s comments saying that the spending is needed to overcome the capacity constraints that have hampered the technology giant’s ability to capitalize on AI.
“As AI becomes more efficient and accessible, we will see exponentially more demand,” he said on a call with analysts.
Even Microsoft CFO Amy Hood hinted at spending in the current quarter saying that it will be around the $22.6 billion level seen in the second quarter.
“In fiscal 2026, we expect to continue to invest against strong demand signals. However, the growth rate will be lower than fiscal 2025 (which ends in June),” she said.
Why DeepSeek became popular
These statements come as DeepSeek’s rapid progress and cost-effective approach have sparked a global selloff in tech stocks, with investors concerned about the potential impact on US AI giants like Nvidia and Microsoft.
DeepSeek claims to have developed its AI model for roughly $6 million, a stark contrast to the tens of billions of dollars Microsoft and Meta have allocated to AI.
However, US tech executives and analysts argue that DeepSeek’s figures likely represent only a portion of its total development costs, focusing primarily on computing power.
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