Deepseek’s dirt-cheap AI puts American tech companies’ frenzied AI spending in perspective

Perhaps what’s most unsettling the markets about China’s powerful new AI model DeepSeek is its price tag — its very small price tag. The company said it spent just $5.6 million to train its latest model. That’s a small fraction of what its US competitors are spending.

OpenAI, for example, spent more than $100 million training GPT-4, and it appears that DeepSeek beats OpenAI’s leading models.

America’s biggest tech companies are tripping over themselves to shell out more and more money for their AI ambitions. Last quarter, Amazon, Alphabet, Microsoft, and Meta spent nearly $60 billion in capex, much of it earmarked for AI projects, and that number will likely go up when those companies report earnings in coming weeks. This year alone, Meta has committed to spending up to $65 billion in capital expenditures, thanks in part to a miles-long AI data center.

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Rani Molla41m

Driverless Waymo struck a child near school in California

A Google Waymo struck a child near a Santa Monica elementary school during morning drop-off last week, as self-driving cars by Waymo, Tesla, and others continue their expansion across the country. In a blog post, Waymo said the fully driverless car detected the child as they emerged from behind a parked SUV, braked sharply, and reduced speed from approximately 17 mph to under 6 mph before striking the child. The child suffered minor injuries and walked away.

The company reported the incident to the National Highway Traffic Safety Administration, which is currently investigating, adding fresh scrutiny to how robotaxis perform in the wild.

Jon Keegan2h

Digging into Microsoft’s cloud backlog

Microsoft’s Azure cloud computing unit is seeing huge demand. In yesterday’s second-quarter earnings call, Microsoft CFO Amy Hood said the company’s commercial bookings increased 230% thanks to large commitments from OpenAI and Anthropic and healthy demand for its Azure cloud computing platform.

Hood said that the company’s “remaining performance obligations” (RPO) ballooned to a staggering $625 billion, up 110% from the same period last year. How long will it take for Microsoft to fulfill these booked services? Hood said the weighted average duration was “approximately two and a half years,” but a quarter of that will be recognized in revenue in the next 12 months.

Shares of Microsoft tanked today, down over 11%, despite the strong beat on revenue and earnings. The drop puts the stock on track to have its worst single-day drop since March of 2020.

Investors may be concerned that while huge, that extra demand was coming only from OpenAI, an issue that Oracle recently experienced.

But Hood said the non-OpenAI RPO still grew 28% year on year, which reflects “ongoing broad customer demand across the portfolio.”

Meta and Tesla are funding the future with their core businesses — but only one of them is still growing

The two tech giants, on back-to-back earnings calls, made it sound like they’re selling the same AI-powered future. But the picture of the underlying businesses, and how they’re using AI to furnish current sales, couldn’t be more different.

Rani Molla3h

Rani Molla

19h

Tesla to stop making Model S and Model X next quarter to pivot to Optimus production

Tesla is not bringing S3XY back.

Jon Keegan

21h

Microsoft beats Q2 earnings and revenue, but stock falls on ballooning capex

Microsoft released its second-quarter earnings on Wednesday.

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