If we were tech mega-millionaires or billionaires, we’d normally sleep easy. But maybe not last week.
The rapid rise of DeepSeek, a Chinese AI company with a low-cost open source model that threatened to usurp US-based AI leaders, clearly rattled tech investors. The day DeepSeek overtook ChatGPT on Apple’s app store, the S&P 500 dropped 1.5%, and Nasdaq, where major tech stocks trade, fell 3.1%. Nvidia, the seemingly unbeatable AI powerhouse, saw $593 billion of market value dry up in one day, “a record one-day loss for any company on Wall Street,” according to Reuters.
Tech companies have been pouring cash into AI investments, and investors are largely still waiting for the payoff. With DeepSeek’s significantly cheaper model, that spend may get harder to justify.
And from the initial reaction on the Street, investors were clearly spooked. Tech CEOs, however? They’re either putting on a happy face—or not as rattled as you’d expect.
Meta and Microsoft were the big names on deck, and they both plan to stick with their hefty AI investments. They also weren’t afraid of the elephant in the room: Microsoft CEO Satya Nadella went so far as to mention DeepSeek in his opening remarks.
“What’s happening with AI is no different than what was happening with the regular compute cycle,” Nadella added later in the call, when asked to speak more about DeepSeek. “It’s always about bending the curve and then putting more points up the curve.”
News built for finance pros
CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.
His overall take on DeepSeek centered around how it could breed cheaper AI, thus fueling AI demand and infrastructure. “DeepSeek has had some real innovations,” he added. “Obviously, now that all gets commoditized, and it’s going to get broadly used.”
Microsoft had previously shared plans to spend $80 billion on AI data centers this fiscal year.
Over at Meta, CEO Mark Zuckerberg said “it’s probably too early to really have a strong opinion” on what DeepSeek’s rise might mean for the company’s “trajectory around infrastructure and [capital expenditures] and things like that.”
He added that Meta is “still digesting” DeepSeek’s innovations, “and there are a number of things that they have advances that we will hope to implement in our systems.”
In any case, the company’s plowing ahead on spending: Meta anticipates somewhere between $60 to $65 billion in capital expenditures this year. Investors seem to have taken that in stride, especially since revenue climbed 21% YoY in the quarter.
“Nobody is more bulled up on AI than Meta,” Barton Crockett, a Rosenblatt analyst, wrote, per Reuters. “And Meta might have more benefits to show from AI than anyone.”