A wave of Big Tech companies reported quarterly earnings in recent weeks — including six of the so-called Magnificent 7 firms — shortly after Chinese AI startup DeepSeek rattled the stock market as investors saw its new, cheap artificial intelligence models as an ominous sign for US tech stocks.
DeepSeek’s innovations so shook the US tech industry that AI darling Nvidia (NVDA) saw $600 billion shaved off its market cap in a single day — the biggest loss in stock market history — as investors worried Big Tech would slow its spending on AI hardware.
Now, some US lawmakers are pushing to ban the app from government-owned devices, according to the Wall Street Journal.
On earnings calls with investors, executives across these firms were quick to praise DeepSeek’s artificial intelligence models, dismissed them, or attempted to avoid the topic altogether.
US tech executives’ reactions to the sell-off — which impacted most of their stocks — ranged from defensive to excited. While most agreed the DeepSeek news is a sign that AI costs will come down eventually, they reaffirmed their commitments to spending massive sums on capital expenditures and other investments for AI infrastructure in 2025, despite a lack of clarity about when the payoff for that spending will come.
Here’s what they said.
Microsoft (MSFT) CEO Satya Nadella was quick to embrace DeepSeek, mentioning the firm in his opening remarks on a post-earnings call on Jan. 29.
Nadella pointed to Microsoft’s move to put DeepSeek’s latest AI model on its developer platforms, Azure AI Foundry and GitHub, adding that it went through “automated red teaming, content safety integration, and security scanning.” He said customers will soon be able to run DeepSeek’s models locally on Microsoft’s AI PCs.
“I think DeepSeek has had some real innovations,” Nadella said, adding that he sees AI getting “commoditized.”
“For a hyperscaler like us, a PC platform provider like us, this is all good news as far as I’m concerned.”
Microsoft Chairman and Chief Executive Officer Satya Nadella speaks during the Microsoft May 20 Briefing event at Microsoft in Redmond, Washington, on May 20, 2024. (Photo by Jason Redmond / AFP) (Photo by JASON REDMOND/AFP via Getty Images) ·JASON REDMOND via Getty Images
Meta (META) — which one tech analyst recently described as “the most well-placed company to take advantage of generative AI” given its advertising business — saw its stock climb on DeepSeek’s debut of its new AI model called R1, with shares rising nearly 2% on the day of the news.
CEO Mark Zuckerberg was relatively nonchalant about the DeepSeek frenzy.
When questioned on whether the potential for lower-cost AI models would affect Meta’s capital expenditures, the chief executive said in a call following the company’s latest quarterly earnings: “I don’t know — it’s probably too early to really have a strong opinion on what this means for the trajectory around infrastructure and capex and things like that.”
Meta CEO Mark Zuckerberg tries on Orion AR glasses at the Meta Connect annual event at the company’s headquarters in Menlo Park, California, U.S., September 25, 2024. REUTERS/Manuel Orbegozo ·REUTERS / Reuters
But DeepSeek is also competition for Meta, which has sought to make its open-source Llama AI models the global standard. DeepSeek’s models are also open source.
“I also just think in light of some of the recent news, the new competitor, DeepSeek from China … it’s one of the things that we’re talking about is there’s going to be an open-source standard globally,” Zuckerberg said.
“And I think for our kind of own national advantage, it’s important that it’s an American standard.”
Asked for his “worldly perspective” on “the DeepSeek situation,” Apple (AAPL) CEO Tim Cook said in a post-earnings call Jan. 30 that “innovation that drives efficiency is a good thing” and noted that the iPhone maker takes a “very prudent and deliberate approach to our expenditure.”
Apple shares jumped more than 3% the same day DeepSeek released its latest R1 model.
When asked about what DeepSeek’s low-cost model means for Google (GOOG), CEO Sundar Pichai said that while DeepSeek’s team has “done very, very good work,” he thinks Google’s Gemini Flash models are better.
“I would say both our 2.0 Flash models, our 2.0 Flash thinking models, they are some of the most efficient models out there, including comparing to DeepSeek’s V3 and R1.”
“And I think a lot of it is our strength of the full-stack development [Google makes its own custom AI chips as well as AI models and the software that runs on them], end-to-end optimization, our obsession with cost per query,” Pichai added.
“I think part of the reason we are so excited about the AI opportunity is, we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down, which will make more use cases feasible.”
Amazon (AMZN) CEO Andy Jassy said he thinks that DeepSeek’s models won’t spark a downturn in AI investment.
“Sometimes people make the assumptions that if you’re able to decrease the cost of any type of technology component, in this case, we’re really talking about inference [running AI models], that somehow it’s going to lead to less total spend in technology. And we have never seen that to be the case.”
Jassy pointed to the company’s aggressive spending on developing its cloud infrastructure in the early 2000s, even as costs came down.
Amazon CEO Andy Jassy speaks during a keynote address at AWS re:Invent 2024, a conference hosted by Amazon Web Services, at The Venetian Las Vegas on December 3, 2024 in Las Vegas, Nevada. (Photo by Noah Berger/Getty Images for Amazon Web Services) ·Noah Berger via Getty Images
He’s right, at least for now.
Meta, Alphabet, Amazon, and Microsoft said in their earnings calls that, despite the anticipation that artificial intelligence training and inference costs will come down, they will spend a cumulative $325 billion in 2025, a 46% increase from the prior year. Amazon is the biggest spender of the group.
Investors weren’t pleased: Amazon’s stock dropped 4% Friday following executives’ commentary that they expect to hike capital expenditures by 35% to more than $100 billion.
AMD (AMD) CEO Lisa Su expressed her conviction that new innovations such as DeepSeek’s models won’t drive down investment in AI, pointing to the recently announced $500 billion Stargate AI infrastructure project backed by SoftBank (SFTBY), Oracle (ORCL), and OpenAI.
“All of these initiatives require massive amounts of new compute and create unprecedented growth opportunities for AMD across our businesses.”
AMD CEO Lisa Su speaks onstage during the 2024 A Year in TIME dinner at Current at Chelsea Piers on December 11, 2024 in New York City. (Photo by Noam Galai/Getty Images for TIME) ·Noam Galai via Getty Images
Perhaps most enthused about DeepSeek’s innovations was Qualcomm (QCOM) CEO Cristiano Amon, who made the case that such developments could speed up the timeline for AI to drive a new wave of demand for smartphones and PCs.
“DeepSeek-R1 and other similar models recently demonstrated the AI models are developing faster, becoming smaller, more capable and efficient and now able to run directly on device,” Amon said.
“As we enter the era of AI inference, we expect that while training will continue in the cloud, inference will run increasingly on device, making AI more accessible, customizable, and efficient. This will encourage the development of more targeted, purpose-oriented models and applications, which we anticipate will drive increased adoption, and, in turn, demand for Qualcomm platforms across a range of devices.”
CEO and President at Qualcomm, Cristiano Amon, attends the first day of Web Summit in Lisbon, Portugal, on November 12, 2024. (Photo by Rita Franca/NurPhoto via Getty Images) ·NurPhoto via Getty Images
Arm (ARM) CEO Rene Haas also argued that the UK-based chip architecture designer would benefit from lower-cost AI for consumer devices, even taking a jab at Nvidia.
“As wonderful a product as [Nvidia’s] Grace Blackwell is, you’d never be able to put it in a cell phone, you’d never be able to put it into earbuds. You can’t even put it into a car. But Arm is in all those places.”
Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.
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