Microsoft, Meta talk up their big AI ambitions and spending plans

The tech giants on Wednesday talked up their AI strategies and said they are sticking with ambitious investments in the technology despite the investor panic this week over the rise of DeepSeek. That Chinese company’s claim that it built an advanced AI model with far less money and fewer advanced chips than big-name U.S. competitors has caused many to question the wisdom of pouring oceans of cash into developing cutting-edge AI systems.

Microsoft Chief Executive Satya Nadella and Meta CEO Mark Zuckerberg said in earnings calls that DeepSeek had made real innovations. But the two portrayed the Chinese company’s work as part of a technological evolution that will make AI cheaper and more widely used rather than the extensive disruption that some observers have perceived.

“There’s a number of novel things that they did that I think we’re still digesting," Zuckerberg said on a call with analysts after Meta reported record quarterly sales and strong profit growth. “I continue to think that investing very heavily in [capital expenditures and infrastructure] is going to be a strategic advantage over time. It’s possible that we’ll learn otherwise at some point. But I just think it’s way too early to call."

Microsoft’s ‘fungible fleet’

Microsoft on Wednesday reported a 12% increase in total sales for its latest quarter but reported growth in its much-watched cloud-computing division that disappointed investors.

The company said this month that has said it is investigating whether DeepSeek trained its new chatbot by repeatedly querying the U.S. company’s AI models.

“In some sense what’s happening with AI it’s no different than what was happening with the regular compute cycle. It’s always about bending the [cost] curve," Nadella said.

He reiterated his point, one that he made on the eve of last weekend’s frenzy over DeepSeek: The more the cost of AI declines, the more people will use the technology. Back then he cited Jevons Paradox, an economic principle that people will use more of a resource when accessing it becomes cheaper.

Wednesday he said simply that “as AI becomes more efficient and accessible, we will see exponentially more demand."

As OpenAI embarks on a campaign to build its Stargate data-center project with SoftBank and other partners, investors asked about the state of Microsoft’s relationship with the ChatGPT maker.

Beyond affirming that their relationship was good, Nadella said that the network of data centers the company is building is a “fungible fleet." He and Hood explained that they were making these facilities capable of shifting between training models and running them, as well as distributing them around the world so they are able take advantage of a variety of clients.

Meta’s advantage

Meta this month announced a sizable increase in its investments driven by artificial intelligence, including $60 billion to $65 billion in capital expenditures, roughly 70% higher than analyst projections.

Zuckerberg on Wednesday emphasized that the winners of the AI arms race—both countries and companies—will be able to set the terms.

“There’s going to be an open-source standard globally," he said on Meta’s earnings call in response to a question about DeepSeek. “For our, kind of, own national advantage, it’s important that it’s an American standard," he said. “So we take that seriously and we want to build the AI system that people around the world are using."

Zuckerberg said DeepSeek did “a number of novel things" that Meta hopes to implement in its systems.

He predicted that companies investing vast sums in computing infrastructure will be able to deploy it in ways that can adjust as AI advances, and such investments will continue to be an advantage. More computing power can generate a higher level of intelligence and service, he said.

“That’s generally an advantage that we’re now going to be able to provide a higher quality of service than others who don’t necessarily have the business model to support it on a sustainable basis," he said.

Meta plans to aim its AI work on “a unique vision focused on personalization," Zuckerberg said.

“People don’t all want to use the same AI," he said. “People want their AI to be personalized to their context, their interests, their personality, their culture, how they think about the world."

Write to Bradley Olson at bradley.olson@wsj.com and Tom Dotan at tom.dotan@wsj.com