Microsoft and Meta Go All-In on AI Despite DeepSeek's Budget-Friendly Challenge

Tech giants Microsoft and Meta double down on AI spending, unfazed by DeepSeek's lower-cost alternative

Jan 31, 2025

Summary

Microsoft and Meta reaffirm major AI investments despite DeepSeek’s affordable model, committing billions to AI infrastructure

Microsoft (MSFT, Financial) and Meta (META, Financial) are sticking to their big AI spending plans, even with DeepSeek's new affordable AI model making waves.

During their recent earnings calls, both tech giants highlighted their commitment to AI. Microsoft reported $15.80 billion in capital expenditures last quarter, a touch above the $15.70 billion analysts expected. CEO Satya Nadella explained that more spending is needed to fix capacity issues and fully tap into AI's potential.

Looking ahead, Microsoft aims to invest $80 billion by 2025 in AI infrastructure and data centers. Over at Meta, CEO Mark Zuckerberg called 2025 a “really big year” for AI, predicting their AI assistant will soon be the most widely used. Meta is gearing up to spend $60 to $65 billion on capital expenditures next year, mainly on generative AI and core projects. Despite DeepSeek's cost-effective alternative, Microsoft and Meta are betting big that their AI investments will pay off long term.

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I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure

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