Microsoft Ceo Tries To Assure Investors Deepseek Is Good For Business As Scrutiny Of Ai Spending Mounts

Microsoft

• Chinese AI startup DeepSeek's model led to increased scrutiny of Microsoft's AI spending.
• Microsoft CEO Satya Nadella said that more AI usage and lower costs benefit the company.
• The comments came after Microsoft reported slowing Azure cloud growth.

Microsoft CEO Satya Nadella tried to assure investors that greater AI usage and lower costs are good for the company — amid increased scrutiny of its significant AI spending after the Chinese startup DeepSeek launched a new AI model.

"AI will be much more ubiquitous," Nadella said on the company's second-quarter earnings call in response to a question about DeepSeek. "And so, therefore, for a hyperscaler like us and a PC platform provider like us, this is all good news as far as I'm concerned."

Nadella's comments came after Microsoft shares fell following its quarterly earnings release, in which the company reported slowing Azure cloud growth and less-than-expected AI and cloud sales.

"DeepSeek has some real innovations," Nadella said. "Obviously, now, that all gets commoditized, and it's going to get broadly used.

"When token prices fall, inference computing prices fall, that means people can consume more, and there'll be more apps written," he added.

The scrutiny surrounding tech-industry AI spending grew after DeepSeek launched a model last week that competes with OpenAI at a fraction of the cost. The release has caused many in the technology industry to call into question the trillions of dollars being spent on AI infrastructure.

Microsoft's spending on AI has already hit unprecedented levels. The company recently said it plans to spend $80 billion on AI data centers in the current fiscal year alone. The pressure on Microsoft to justify that spending is increasing, too.

Nadella's statement in the earnings release notably touted that the company is helping customers "unlock the full ROI of AI to capture the massive opportunity ahead."

Amid all the recent AI news, including about DeepSeek, Microsoft chief financial officer Amy Hood sent an internal memo to employees encouraging them to stay focused.

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