DeepSeek’s cost-efficient AI training advancements rocked tech markets on Monday and came in just in time to give U.S. tech investors a reason to pay close attention to earnings season. Tech earnings will kick off on Wednesday, with earnings coming from Microsoft, Meta, and Tesla, followed by Apple on Thursday. DeepSeek released a cheaper AI model called R1 last week that outshined OpenAI’s latest model in many third-party tests. The Hangzhou-based AI company launched a free, open-source model in December that revealed it took only two months and less than $6 million to build. The company’s news drew panic on Wall Street due to the potential implications of cheaper AI models coming sooner rather than later. The tech industry plummeted after the news, with the S&P 500 dropping 1.46% and the Nasdaq tanking by roughly 2.3% on Monday. Tech companies to release earnings amid market shockwave from DeepSeek Big week for tech earnings, and most analysts' questions will likely focus on the impact of DeepSeeK. pic.twitter.com/yMdlZQtrR5 — The Transcript (@TheTranscript_) January 27, 2025 Nvidia plummeted over 17% since Monday, a drop that was last seen during the early days of the Covid pandemic in March 2020. The drop in Nvidia’s stock price wiped out $600 billion in its market cap, the biggest 24-hour loss ever for a U.S. company. Some of the big tech companies that spend billions of dollars on AI infrastructure, and mostly for Nvidia’s GPUs, will release quarterly results on Wednesday, including Microsoft, Meta, and Tesla. Apple will follow on Thursday, while Alphabet and Amazon will release next week. An analyst at Stifel believes the main attention to tech earnings this week with regard to DeepSeek will be more about costs rather than about revenue. The sheer efficiency of DeepSeek’s pre and post-training framework (if true) raises the question as to whether or not global hyperscalers and governments that have and continue to invest significant capex dollars into AI infrastructure may pause to consider the innovative methodologies that have come to light with DeepSeek’s research.” – Stifel Analyst Investors eye big tech company’s earnings releases from Wednesday Meta, one of the companies that spend billions of dollars on AI infrastructure, will release its earnings tomorrow. The firm’s CEO, Mark Zuckerberg, revealed last week that Meta plans to invest around $65 billion in AI infrastructure in 2025. The social network company’s earnings are important to investors and a change in market dynamics poses a deep interest to shareholders, given how much Meta spends on Nvidia GPUs. Meta’s stock price rose by 2% on Monday compared to other tech companies’ stock prices like Nvidia’s that plummeted. Microsoft also gained roughly 2% on Monday, garnering a different response from other tech companies. The tech company has shown interest in the AI industry, especially with ChatGPT creator OpenAI, where it has pumped roughly $14 billion into OpenAI to aid its startup. Sam Altman, CEO of OpenAI, referred to DeepSeek’s R1 as an “impressive model,” particularly around what they were able to deliver for the price. Altman acknowledged that they would deliver much better models, and it was “legit invigorating to have a new competitor!” Oppenheimer analyst Timothy Horan regarded DeepSeek as a negative sign for Microsoft, which he wrote in a report that it “has bet more on proprietary modes (OpenAI) and higher-cost hardware.” The tech company revealed at the beginning of the year that it plans to spend $80 billion in 2025 on the construction of data centers that can handle AI workloads. Tesla CEO Elon Musk was a co-founder of OpenAI back in 2015, but he’s now involved in a legal battle with the firm and Altman. Musk is suing to stop OpenAI from transforming into a for-profit entity. He is also the founder of xAI, which is raising billions of dollars, largely to buy Nvidia GPUs. Musk has also been expanding AI spending at Tesla and he talked about the company’s sizable AI investment as a key advantage. The founder of SpaceX also said that Tesla would spend $10 billion for the year “in combined training and inference AI.” UBS analysts argued that greater efficiency in model training and inference could help advance autonomous vehicles. They added that affordable open-sourced models “could break the narrative that the more capital put into computing and infrastructure, the more likely the probability of success.” Cryptopolitan Academy: FREE Web3 Resume Cheat Sheet - Download Now
