The revelation about DeepSeek AI’s capabilities and costs rattled the US market a couple of days ago. Major semiconductor, power, and other AI-related stocks lost a big chunk of their value during trading, estimated at over a trillion dollars. Nvidia alone lost $600 billion in market cap, the most ever single-day drop in history.
Since that crash, a closer look at DeepSeek AI’s claims has calmed investor nerves. There are questions about the firm’s claims on training costs and even if true, analysts are slowly realizing they may not be as bad for many companies as originally thought. Because the US is involved in an AI race with China, it is unlikely the country is going to stop investing in its AI infrastructure just because it supposedly got beaten at it. In fact, that is all the more reason to start spending more.
Later today, a number of tech companies announced their earnings report. The probability of them being asked questions on DeepSeek AI is quite high. Investors want to listen to what these companies think and for that reason, these earning calls may be more relevant than ever in the market’s history.
To come up with the list of 5 companies that may address DeepSeek AI concerns in their earnings calls today, we only considered Mega Cap stocks that are expected to announce their earnings later today.
A scientist at a computer station, surrounded by a neural network of artificial intelligence code.
5. Microsoft Corporation (NASDAQ:MSFT)
Microsoft Corporation is a provider of computer software, devices, services, and solutions operating through intelligent cloud, productivity & business processes, and more personal computing segments. The company supplies its products through retail stores, digital platforms, Original Equipment Manufacturers (OEMs), and resellers.
Over the last year, MSFT stock has underperformed the market despite its dominance in AI. It is the strong balance sheet and the recurring revenue that helps the stock stay afloat even in tough times. Its cloud business as well as its AI initiatives will be in focus when the earnings are announced later today. A 10% topline growth is expected, but that is not something investors will be looking at later today.
Capital Expenditure will continue to be a focus point. The spending on AI infrastructure alone is expected to cross $80 billion this fiscal year. Microsoft has a unique advantage where it can integrate its AI advancements into existing enterprise workflows and doesn’t really have to look for a customer, they are already there. The DeepSeek AI threat doesn’t exist for Microsoft. Even if the model goes mainstream, a good chunk of the resulting training for users will most likely be implemented on MSFT’s cloud network in the US. The company’s dominance in Agentic AI is also unlikely to be affected by what DeepSeek currently has to offer. Having said that, it will be interesting to see what the management has to say about these developments at the earnings call later today.
4. Meta Platforms Inc. (NASDAQ:META)
Meta Platforms Inc., a technology company develops products that help people to connect with others through PCs, wearables, mobile devices, and virtual reality headsets. The company operates through reality labs and a Family of App segments. The stock is up 15% YTD and 8% in the last 5 trading days, clearly showing the investor expectations from today’s earnings.
While AI is obviously one factor in this optimism, there’s another thing that could take investors by surprise. According to a recent report, META’s CTO Andrew Bosworth has claimed that Reality Labs, a division that makes VR and AR products, is set to beat all expectations for 2024 by a huge margin. If this happens, META’s AI plans will take a different turn, as the monetization of AI will become even easier for the company.
A reminder of course that META was one of the few companies that saw a measurable return on its AI investments in dollar terms as its advertising technology improved massively. This advertising demand is expected to stay strong in the quarter in question as well, making META’s decision to invest $65 billion in AI in 2025 an attractive proposition for investors. This spending will be questioned at today’s earnings call and the management’s answers will be interesting to listen to.