DeepSeek's rapid advancements have raised questions about America's AI dominance, as they assert their models can rival or even surpass Western competitors at a much lower cost. However, the U.S. leaders emphasized on Wednesday that creating extensive computer networks is crucial to meet the increasing demands of businesses.
Mark Zuckerberg, CEO of Meta, mentioned during a post-earnings call that investing "very heavily" in infrastructure will provide a strategic edge in the long run. Meanwhile, Satya Nadella, Microsoft's CEO, pointed out that this spending is vital to address the capacity issues that have limited the tech giant's ability to leverage AI effectively. He noted that as AI becomes more efficient and accessible, the demand will skyrocket.
Microsoft has set aside $80 billion for AI this fiscal year, while Meta is committing up to $65 billion for the technology. In contrast, DeepSeek claims to have spent only about $6 million to develop its AI model. U.S. tech leaders and Wall Street analysts argue that the significant spending reflects the costs of computing power rather than the total development expenses.
Despite this, some investors are growing impatient with the substantial spending and the absence of significant returns. Microsoft’s shares, often viewed as a leader in the AI sector due to its partnership with OpenAI, dropped 5% in after-hours trading after the company indicated that its Azure cloud business growth would not meet expectations. Brian Mulberry, a portfolio manager at Zacks Investment Management, which owns Microsoft shares, expressed the need for a clearer monetization strategy for all the capital invested.
Meta has been sending out mixed messages about how well its investments in AI tools are really doing. They had a solid fourth quarter, but their sales outlook for the current period isn’t looking too great. Daniel Newman, an analyst at Futurum Group, pointed out, "With all these big expenses, they really need to ramp up their revenue.
This week was definitely a wake-up call for the U.S." He added, "Right now, there’s too much spending on AI and not enough actual use." On a brighter note, it seems like some executives are starting to make changes.
Microsoft’s CFO, Amy Hood, mentioned that the company plans to keep its capital spending around the $22.6 billion mark for this quarter and the next. She also noted, "In fiscal 2026, we’ll keep investing based on strong demand signals, but the growth rate will be slower than in fiscal 2025, which wraps up in June."