In the past week, Alphabet's AI budget seems to be facing challenges due to the rise of the Chinese company DeepSeek, which has led to a significant drop in Nvidia's stock. Market speculation about DeepSeek suggests that its cheaper AI models could reduce the demand for AI chips and data centers.
Image Note: Image generated by AI, image licensed from Midjourney
However, Alphabet's CEO Sundar Pichai praised DeepSeek highly during the latest earnings call, describing their work as "exceptional" and emphasizing that their Gemini model is also highly efficient.
Despite facing market competition, Alphabet has not backed down on AI spending. The latest earnings report shows that Alphabet plans to increase capital expenditures to $75 billion this year, a 42% increase from last year. This funding will be used to accelerate the company's AI advancements. Alphabet hopes that by lowering the cost of AI usage, it can significantly boost the demand for its services, rather than making these services nearly free, which could threaten its business model.
Pichai mentioned during the earnings call: "We are very excited about the opportunities in AI because we know we can drive extraordinary use cases by continuously lowering usage costs, making more applications feasible." He also stated that the potential in this area is vast, and therefore the company will increase investments to seize this moment.
Additionally, Meta CEO Mark Zuckerberg expressed similar views during last week's earnings call. He committed that despite the ongoing buzz around DeepSeek, Meta will continue to invest "tens of billions" in AI development over the long term.
While the effects of these investments are not yet clear, it is evident that tech giants have the capacity to bear AI-related expenses, and it remains uncertain when or if this trend will slow down.
Key Points:
📈 Alphabet plans to increase AI capital expenditures to $75 billion, up 42%.
🤖 CEO Sundar Pichai describes DeepSeek's AI model as "exceptional" and is optimistic about future AI applications.
💰 Meta also commits to long-term AI investments, stating it will not reduce spending due to the impact of DeepSeek.
