Dan Ives Predicts Continued AI Investment from Meta and Microsoft Despite DeepSeek Disruption

Wedbush Securities analyst Dan Ives anticipates that Meta Platforms Inc. (META) and Microsoft Corp. (MSFT) will maintain their substantial spending plans on artificial intelligence (AI) during their forthcoming earnings calls, even in light of recent market concerns regarding the disruptive capabilities of the Chinese AI startup DeepSeek.

What is Expected: Ives shared insights on X on Tuesday, asserting that both companies are likely to reaffirm their ambitious AI-related capital expenditures for 2025. Specifically, Meta is projected to invest approximately $60 billion to $65 billion, while Microsoft plans to allocate about $80 billion.

These comments from Ives come at a crucial time as both tech giants are set to announce their quarterly earnings amidst market instability triggered by DeepSeek’s unexpected introduction of a new large language model (LLM). Reports suggest that this model was developed for a mere $6 million using specialized Nvidia Corp. (NVDA) chips.

Despite the stir caused in tech stocks due to DeepSeek's innovations, Ives remains unfazed, asserting that major U.S. corporations will not turn to a Chinese startup like DeepSeek for their AI infrastructure needs. He referred to the market’s reaction as a "golden buying opportunity," encouraging investors to view the situation from a more measured perspective.

Ives is confident that during the earnings conference call, Meta and Microsoft will emphasize their planned 2025 AI expenditures clearly and assertively. This information is of particular interest to analysts and investors following the recent developments surrounding DeepSeek's LLM.

Importance of the Earnings Reports: Analysts expect that Meta's upcoming earnings report will showcase strong advertising performance, which is likely to bolster revenue growth. According to Goldman Sachs analyst Eric Sheridan, Meta is expected to demonstrate "above-industry topline growth over the next several quarters," bolstered by strong advertising momentum and untapped opportunities within platforms like WhatsApp and Messenger.

On the other hand, Microsoft investors are expected to pay close attention to the performance of Azure's cloud computing. Analysts are projecting impressive revenue growth rates of 31-32%. However, Oppenheimer analyst Timothy Horan has expressed some caution, suggesting that investor optimism about immediate returns from AI investments could be excessive.

The landscape of AI continues to change rapidly, with both Meta and Microsoft heavily invested in the sector. Ives stressed that the current focus in AI revolves around enterprise use cases and broader infrastructure, which is directed towards an estimated $2 trillion in capital expenditures over the next three years. He highlighted the strategic necessity for both companies to continue with their planned investment levels, even amid prevailing market uncertainties.

AI, Investment, Earnings