Microsoft, Meta Back Big AI Spending Despite DeepSeek’s Low Costs

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, Meta Back Big AI Spending Despite DeepSeek’s Low Costs

Days after ******** startup DeepSeek’s breakthrough low-cost AI computing shook the US technology industry, CEOs of

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and Meta defended massive spending saying it was crucial to staying competitive in the new field.

DeepSeek’s quick advances with models that it claimed can match or even outperform Western rivals at a fraction of the cost stirred doubts about the lead US has, but the top executives said building huge computer networks was necessary to serve growing corporate needs.

“Investing very heavily in capital expenditure and infrastructure is going to be a strategic advantage over time,” Meta CEO Mark Zuckerberg said on a post-earnings call.

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CEO Satya Nadella said the spending would ease capacity constraints that have hampered the technology giant’s ability to capitalise on AI.

“As AI becomes more efficient and accessible, we will see exponentially more demand,” he said on a call with analysts.

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has earmarked $80 billion (roughly Rs. 6,93,031 crore) for AI in its current fiscal year, while Meta has pledged as much as $65 billion (roughly Rs. 5,63,085 crore).

That is a far cry from the roughly $6 million (roughly Rs. 5,63,085 crore) DeepSeek said it has spent to develop its AI model. US executives and Wall Street analysts said that is the amount spent on computing power, rather than all development costs.

Still, some investors seem to be losing patience with the hefty spending and lack of big payoffs. 

Shares of

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— widely seen as a frontrunner in the AI race because of its ties to industry leader OpenAI – were down six percent in early trading on Thursday after the company said growth in its Azure cloud business would miss third-quarter estimates. 

“We really want to start to see a clear roadmap to what that monetization model looks like for all of the capital that’s been invested,” said Brian Mulberry, portfolio manager at Zacks Investment Management, which holds shares in

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.

Meta, meanwhile, sent mixed signals about how its bets on AI-powered tools were paying off with a strong fourth quarter, but a lackluster sales forecast for the first quarter. Its shares were up more than four percent on Thursday.

“With these huge expenses, they need to turn the spigot on in terms of revenue generated, but this week was a wake-up call for the US.,” said Futurum Group analyst Daniel Newman.

“For AI right now, there’s too much capital expenditure, not enough consumption.”

There are some signs that executives are aiming to keep a check on expenditure.

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CFO Amy Hood said capital spending in the third and fourth quarters would remain around the $22.6 billion (roughly Rs. 1,95,769 crore), a 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.

© Thomson Reuters 2025

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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#Meta #Big #Spending #DeepSeeks #Costs

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