Despite the emergence of companies like DeepSeek offering potentially cheaper AI models, tech giants like Alphabet and Meta are doubling down on their AI investments. Alphabet, even while acknowledging DeepSeek’s “tremendous” work, announced a massive 42% increase in capital expenditures, reaching $75 billion this year, to further its own AI development.
Alphabet’s CEO, Sundar Pichai, believes that decreasing AI costs will actually increase demand for their services, driven by the feasibility of new use cases. He highlighted the potential for growth in AI usage, or “inference,” thanks to Alphabet’s vast user base. Pichai emphasized the enormous opportunity space and justified the increased investment as necessary to capitalize on it.
Meta’s CEO, Mark Zuckerberg, echoed similar sentiments, stating that they plan to invest “hundreds of billions” in AI over the long term. This demonstrates that despite the potential disruption from more affordable AI models, these tech giants are betting that the overall expansion of AI usage will ultimately benefit them. They are essentially wagering that increased accessibility will lead to a larger market, even if individual services become less expensive.
While the long-term impact of cheaper AI remains uncertain, for now, these tech giants have the resources to fund these substantial AI investments. The question of when, or if, this spending will slow down is open to speculation.