The emergence of China-based AI startup DeepSeek has raised questions about AI spending among major tech companies. Industry leaders like Apple, Microsoft and Meta remain committed to heavy investments in AI despite concerns about cost efficiency and competition.
During the first-quarter earnings call of Apple, CEO Tim Cook addressed the topic and emphasized their hybrid AI approach. Apple processes simple AI tasks locally on devices while handling complex operations in the cloud. Cook highlighted cautious yet consistent capital expenditure strategy of Apple and stated that their hybrid AI model continues to serve them well.
DeepSeek recently announced that it developed its R1 AI model for just $5.6 million. It was lower than the massive investments which were traditionally required by U.S. tech giants. The revelation raised concerns about potential cost-cutting in AI infrastructure spending.
Meta CEO Mark Zuckerberg shared a similar sentiment and said that it is too early to judge the way advancements of DeepSeek will impact AI infrastructure and investments. Some investors initially reacted with concern and particularly regarding the role of Nvidia as a key AI chip supplier.
Meta is moving forward with its plans to invest between $60 billion and $65 billion in capital expenditures. Microsoft is similarly undeterred and CEO Satya Nadella confirmed an $80 billion investment to enhance AI infrastructure.
Nvidia experienced stock volatility as investors worried about shifts in AI spending following the rise of DeepSeek. Analysts from Goldman Sachs and Bank of America believe that the position of Nvidia remains strong. Microsoft and Meta’s continued capex commitments reassured the market despite Meta’s exploration of custom silicon for certain AI workloads. Bank of America analyst Vivek Arya noted that while discussions on chip architecture will persist, major tech firms are not scaling back AI spending.
Nvidia remains optimistic equipped with industry experts suggesting that the efficiency of DeepSeek may actually lead to greater AI infrastructure demand. Analyst Blayne Curtis believes that reasoning-based AI models will require more computational power.
Apple also continues to balance innovation with financial prudence. The approach of Cook to AI investments reflects a careful but forward-thinking stance.
