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In the first week of tech earnings calls, CEOs shrugged off the threat of DeepSeek, all playing a similar tune that disruption is par for the course. “That’s part of the nature of how this works, whether it’s a Chinese competitor or not,” Mark Zuckerberg said Wednesday after reporting higher fourth-quarter and annual earnings, though he acknowledged they were “still digesting” the news that upended US tech stocks earlier this week.
When asked about DeepSeek during Apple’s earnings call, CEO Tim Cook said, “Innovation that drives efficiency is a good thing,” adding that Apple has always taken a “prudent and deliberate” approach to its AI spending.
Meta and Apple, which both reported higher earnings, are slightly shielded from DeepSeek’s ascendance, at least when it comes to their bottom lines. An overwhelming majority of Meta’s $48 billion in quarterly revenue came from social media ad sales, a market DeepSeek can’t touch yet. And Apple reported record-high revenues of $124 billion partly thanks to a bump in streaming and cloud services.
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The biggest loser was Microsoft, which saw its stock drop 6% on the heels of disappointing guidance. It will soon bring DeepSeek models to its personal computers, CEO Satya Nadella said during Wednesday’s earnings call.
As powerful models that used to require cloud infrastructure start to run on PCs, “AI will be much more ubiquitous,” he said. “And so, therefore, for a hyperscaler like us, a PC platform provider like us, this is all good news as far as I’m concerned.”
Microsoft’s dependence on software services highly integrated with AI makes it a bigger target — and potentially a bigger benefactor — of competitive models from China.
Alphabet and Amazon report earnings next week, and Nvidia later in February.
Notable
- DeepSeek’s claims that its AI model cost a fraction of what American AI companies are spending has led investors to question whether the demand in compute power that sent tech stocks soaring is overhyped. It could force companies to answer difficult questions about their AI spending, the New York Times reported, with strategist Steve Sosnick calling it a “big slap in the face” for investors.