Microsoft, Meta CEOs defend hefty AI spending after DeepSeek stuns tech world
Published On Jan 29, 2025, 10:23 PM
Microsoft and Meta's CEOs defended their substantial investments in AI following the revelation by DeepSeek, a Chinese company, of a new low-cost AI computing model that competes with Western technologies. Both executives emphasized the necessity of investing heavily in infrastructure to meet growing AI demands despite concerns from investors about the high spending and lack of immediate returns. Microsoft's stock dropped 5% after it reported that its Azure cloud business growth fell short of expectations, and Meta's forecast was mixed regarding AI's profitability.
Stock Forecasts
MSFT
Negative
The significant investments by Microsoft and Meta in AI indicate a long-term strategy to remain competitive in a rapidly evolving field. However, the immediate market reactions and performance disappointments suggest skepticism on Wall Street about these companies' ability to monetize their spending effectively in the short term. The recent developments from DeepSeek could increase competition in AI, which may pressure U.S. companies' market positions.
META
Negative
Meta's mixed signals regarding AI revenue potential reflect broader concerns among investors about the sustainability of high capital expenditures without clear short-term revenue generation. With the competitive landscape shifting rapidly, Meta will need to demonstrate returns on its investments to appease shareholders and regain market confidence.
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