Satya Nadella, the C.E.O. of Microsoft, said his company will keep up its investments in A.I. despite China’s DeepSeek! Credit…Chalinee Thirasupa/Reuters
Dear Commons Community,
Both Meta and Microsoft are committing to large investments in artificial intelligence, despite new Chinese software developed by DeepSeek outperforming American rivals at a lower cost.
Wall Street has been on tenterhooks about how Silicon Valley would respond to DeepSeek, the Chinese start-up whose low-cost artificial intelligence software threatens to undercut the pricey American approach to the technology.
So far, the answer appears to be: full steam ahead. As reported by The New York Times.
Meta and Microsoft, two of the so-called Magnificent Seven group of tech stocks, said they each planned to keep spending billions on A.I. And news reports about SoftBank’s talks to inject billions more into OpenAI suggest that deep-pocketed investors are still bullish on the ChatGPT creator.
Continuing to spend heavily on A.I. will be a “strategic advantage over time,” Mark Zuckerberg, Meta’s C.E.O., told analysts on Wednesday, defending plans to invest up to $65 billion, largely in A.I.-related resources, this year.
And Amy Hood, Microsoft’s C.F.O., told analysts that her company — which plans to invest about $80 billion in A.I. this fiscal year — will grow such spending next year, though at a slower rate. It’s worth noting that Microsoft’s sales growth slowed in the most recent quarter partly, according to the company, because it lacked the cloud computing capacity to meet A.I. demand.
The comments were a strong defense of the status quo, where the prevailing wisdom is that winning the A.I. race requires lots of money to buy expensive Nvidia chips and build data centers to train and power such software.
That’s despite DeepSeek seemingly showing that it was possible to achieve industry-leading performance with a fraction of those resources (even as OpenAI has raised questions about its rival’s achievements.)
And then there’s SoftBank, which is in talks to invest $15 billion to $25 billion in OpenAI, according to The Financial Times and The Wall Street Journal. That would come after the ChatGPT creator raised $6.6 billion from SoftBank and others, and after OpenAI and SoftBank agreed to collaborate on the $100 billion-plus Stargate data center initiative.
Masa Son, SoftBank’s wildly ambitious C.E.O., wants to become a central figure in A.I. A deal would make OpenAI SoftBank’s biggest bet to date on A.I., underscoring a belief by Son — who tends to bet big on companies he thinks will be clear winners — that OpenAI fits that bill.
But there are signs that Microsoft is willing to hedge on OpenAI. Microsoft is the start-up’s largest investor, at least for now, and Satya Nadella, the tech giant’s C.E.O., said that he remained committed to their partnership.
He added, however, that the data centers that Microsoft is building to support A.I. applications were “fungible” and could be tasked to different models, including DeepSeek’s.
Investors appear to have mixed feelings. Shares in Meta were up 2 percent in premarket, a seeming ratification of Zuckerberg’s plans. But shares in Microsoft were down nearly 4 percent, in part because of uncertainty over sales growth and spending.
The battle of the AI titans is heating up!
Tony
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