Nadella and Zuckerberg reportedly argued that aggressive spending is critical to maintaining US competitiveness—even as China’s DeepSeek challenges the sector with low-cost breakthroughs.
Zuckerberg described Meta’s projected US$65 billion in annual AI infrastructure spending as a “strategic advantage,” while Nadella pointed to Microsoft’s US$80 billion fiscal-year AI budget as essential to meeting surging demand.
Both CEOs made the remarks days after DeepSeek—a Chinese startup claiming to match US AI performance at a fraction of the cost—triggered investor doubts about the sustainability of Western tech giants’ spending.
DeepSeek reportedly spent just US$6 million on computing power to develop its latest model—a figure US executives argue excludes broader development costs.
Still, the startup’s rapid rise has intensified scrutiny of AI monetization. Microsoft shares fell 6% Thursday after forecasting slower growth in its Azure cloud unit, with some investors demanding clearer revenue roadmaps. Meta’s shares rose 4% despite a mixed Q1 sales outlook, as Zuckerberg highlighted “strong traction” with AI-powered advertising tools.
Microsoft CFO Amy Hood signaled moderating growth in fiscal 2026, noting Q3/Q4 capital spending will hold steady at US$22.6 billion per quarter. Meanwhile, OpenAI—which Microsoft backs—is reportedly in talks to raise up to US$40 billion in a SoftBank-led round valuing the company at US$340 billion. Part of the funds would support Stargate, a Trump-announced US AI infrastructure project involving Oracle and SoftBank.
DeepSeek’s US app surged to the top of Apple’s App Store this week, with OpenAI CEO Sam Altman acknowledging the startup as “a great model” that showcases the “level of competition” in AI.
The debate highlights the high-stakes balance between sustaining AI innovation and delivering returns—particularly as cost-efficient rivals like DeepSeek reshape global expectations for the industry.