Days after Chinese startup DeepSeek unveiled a breakthrough in low-cost AI computing, Microsoft and Meta executives defended their significant capital investments in the technology, arguing that large-scale spending is essential for competitiveness.
DeepSeek’s claims of developing AI models that rival Western counterparts at a fraction of the cost have raised concerns over the U.S. lead in AI, but industry leaders emphasized the need for massive infrastructure to meet growing corporate demand.
Meta CEO Mark Zuckerberg said on a post-earnings call that investing heavily in capital expenditure and infrastructure would be a long-term strategic advantage. Microsoft CEO Satya Nadella echoed this view, stating that rising AI efficiency and accessibility would drive exponential demand, requiring large-scale investment to overcome capacity constraints.
Microsoft has committed $80 billion to AI in its current fiscal year, while Meta has allocated up to $65 billion. In contrast, DeepSeek has reportedly spent only around $6 million to develop its AI model, though U.S. executives argue this figure reflects computing costs rather than total development expenses.
Despite the investment push, some investors appear concerned over the high spending and slow returns.
Microsoft shares dropped 5% in extended trading after the company projected lower-than-expected growth for its Azure cloud business. Meta reported a strong fourth quarter but issued a lackluster sales forecast, sending mixed signals on AI-driven revenue gains.
Microsoft CFO Amy Hood indicated that capital spending in the current and next quarter would remain at approximately $22.6 billion. She added that while investments would continue in fiscal 2026, the growth rate would slow compared to fiscal 2025, which ends in June.
