In the wake of a groundbreaking advancement by the Chinese startup DeepSeek, which claims to offer low-cost AI computing capable of rivaling Western technologies, top executives from Microsoft and Meta have emphasized the necessity of their substantial investments in technology. They argue that such expenditures are essential to maintaining competitiveness in an evolving landscape.
The rapid progress made by DeepSeek has prompted questions about the United States’ technological edge. Yet, CEO of Meta, Mark Zuckerberg, contends that significant investment in infrastructure and capital is a strategic imperative for future success. He expressed this view during a recent post-earnings conference call.
Similarly, Microsoft CEO Satya Nadella highlighted the importance of investment in overcoming capacity challenges that have limited the company’s potential to leverage AI advancements. During a call with analysts, he noted the increasing demand for AI capabilities as efficiency and accessibility improve.
Notably, Microsoft has allocated approximately $80 billion (around Rs. 6,93,031 crore) for AI initiatives in its current fiscal year, while Meta has committed to a budget as high as $65 billion (about Rs. 5,63,085 crore).
This level of spending contrasts sharply with DeepSeek’s reported $6 million (about Rs. 5,63,085 crore) investment in developing its AI model, leading US executives and analysts to assert that DeepSeek’s expenditure pertains primarily to computing resources rather than comprehensive development costs.
Despite the ambitious spending plans of these tech giants, some investors are expressing frustration over the lack of immediate returns. Microsoft’s shares, perceived as a frontrunner in the AI sector due to its affiliations with OpenAI, saw a six percent decline in early trading on Thursday after the company projected that growth in its Azure cloud segment would fall short of third-quarter expectations.
“We are looking for a clearer pathway to understanding how the significant investments will translate into monetization,” stated Brian Mulberry, a portfolio manager at Zacks Investment Management, which owns Microsoft stocks.
In contrast, Meta’s performance reflects a mixed narrative; while it reported a strong fourth quarter, its first-quarter sales forecasts were less promising. Following these announcements, Meta’s shares rose over four percent on Thursday.
Analyst Daniel Newman of Futurum Group remarked, “Given these substantial expenses, it is crucial for them to start generating revenue. This week has served as a wake-up call for the US tech sector.” He added, “Currently, there is an imbalance of excessive capital investment and insufficient consumption in AI.”
There are indications that executives are becoming more cautious with their spending. Microsoft CFO Amy Hood indicated that capital expenditures in the coming third and fourth quarters would remain consistent at approximately $22.6 billion (around Rs. 1,95,769 crore), a level matching that of the previous quarter.
“In fiscal 2026, we anticipate continued investment based on strong demand signals. However, we expect growth rates to be lower than those seen in fiscal 2025,” she elaborated.
© Thomson Reuters 2025
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
