Alphabet and Meta Boost AI Investments Despite DeepSeek Concerns, Set to Spend Billions

AI spending seemed at risk last week when DeepSeek’s stock plunge sent ripples through Nvidia’s valuation, fueled by speculation that the Chinese company’s cheaper AI models could reduce demand for AI chips and data centers.

Alphabet CEO Sundar Pichai has certainly taken note of DeepSeek’s rise, calling its work “tremendous” during the company’s latest earnings call, while emphasizing that some of its Gemini models are equally efficient.

However, like Meta, Alphabet is not backing down in the ongoing battle of Big Tech’s AI arms race. In its most recent earnings report, the company revealed plans to ramp up capital expenditures to $75 billion this year — a substantial 42% increase — in a bid to accelerate its AI advancements.

Alphabet’s strategy is based on the belief that cheaper AI will drive massive demand for its services, rather than rendering its business models obsolete. The company pointed out that it stands to benefit from the rise in AI usage — referred to as “inference” — given its vast existing user base.

“We’re extremely excited about the AI opportunity because we know the cost of using AI is going to continue to drop, making more use cases viable,” Pichai stated during the earnings call. “That’s where the real opportunity lies. It’s as big as it gets, which is why you’re seeing us invest to seize that moment.”

Meta CEO Mark Zuckerberg echoed similar sentiments in his company’s earnings call last week, pledging to invest “hundreds of billions” into AI over the long term, despite the rising buzz surrounding DeepSeek.

While the long-term effects remain uncertain, for now, tech giants seem well-equipped to shoulder the growing AI costs — and when, or if, the pace will slow down is anyone’s guess.