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DeepSeek will be a big topic on Apple, Meta, other tech earnings calls

Jan 28, 2025 - businessinsider.com
US tech companies are preparing for earnings reports amid heightened scrutiny due to China's DeepSeek introducing an AI model, R1, that rivals US models at a significantly lower cost. This development has intensified investor and analyst focus on AI spending, as DeepSeek's model has already impacted US tech stocks, wiping over $1 trillion in market cap in one day. Companies like Tesla, Meta, Microsoft, Apple, and Amazon are expected to address the implications of DeepSeek's model on AI infrastructure spending during their earnings calls. Analysts anticipate questions on whether this new model will influence future spending and strategic planning, particularly in relation to chip demand from companies like Nvidia.

DeepSeek's R1 model, costing less than $6 million to train, contrasts sharply with Meta's planned $60 billion AI infrastructure investment by 2025. This has raised concerns about the justification of current AI spending levels. The situation has also sparked discussions on the potential need for more efficient AI development approaches. While some companies, like Apple, may benefit from the reduced cost of AI training, others, such as Nvidia, may face challenges due to tempered demand for their chips. Overall, the introduction of DeepSeek's model has made this earnings season more complex and could reshape strategic planning in the tech industry.

Key takeaways:

  • DeepSeek's AI model R1 is similarly effective to US models but at a lower cost, impacting US tech companies' earnings discussions.
  • DeepSeek's announcement led to a significant drop in US tech stocks, highlighting concerns about AI spending and infrastructure investments.
  • Analysts expect tech companies to address DeepSeek's impact on future AI infrastructure spending during earnings calls.
  • Cheaper AI models like R1 could create opportunities for startups and enterprises, potentially reshaping strategic planning in the tech industry.
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