Mark Zuckerberg Shares Insights on DeepSeek Amid Meta’s AI Spending Criticism
Meta Platforms Reports Mixed Q4 Results Amid AI Ambitions
On Wednesday, Meta Platforms, the parent company of Facebook and Instagram, announced its revenue for the fourth quarter exceeded Wall Street’s projections. However, the company cautioned that sales in the current first quarter might fall short of expectations. This has raised questions about the effectiveness of investments in expensive artificial intelligence (AI) technologies.
Q1 Revenue Expectations
Meta forecasts its first-quarter revenue to fall between $39.5 billion and $41.8 billion. This estimate contrasts with analysts’ average projection of $41.72 billion, according to data sourced from LSEG. Following this announcement, Meta’s shares remained stable after trading hours, but they showed positive movement as CEO Mark Zuckerberg expressed optimism about the company’s AI initiatives. He emphasized that open-source AI is the right strategy following a significant launch from a Chinese competitor, DeepSeek, which impacted global market dynamics.
Insights from the Conference Call
During a recent conference call, Zuckerberg remarked, “There’s going to be an open-source standard globally. It’s important that it’s an American standard.” While highlighting the push for open-source AI, the company’s ambitious investment plans have raised concerns about its capital allocation. Meta primarily relies on advertising revenues from its social media platforms to support its growing AI-related costs and investments in futuristic technologies such as smart glasses and augmented reality.
Recently, Zuckerberg revealed that Meta intends to spend as much as $65 billion in 2025 to bolster its AI infrastructure and plans to ramp up hiring in AI roles. On the other hand, total expenditure for 2025 is expected to range between $114 billion and $119 billion—an increase from $95 billion in 2024.
Market and Analyst Perspectives
Jeremy Goldman, a principal analyst at eMarketer, pointed out, “Meta’s impressive Q4 results clearly show that ad revenues are crucial for the company. However, the real concern as we look toward 2025 is whether Zuckerberg’s hefty AI infrastructure investments will yield positive returns.”
Additionally, Meta’s user base saw growth, with daily active people (DAP) rising by about 5% year-over-year, reaching 3.35 billion users. This positive outcome comes even as competition from a Chinese startup, DeepSeek, escalates. DeepSeek claims its AI models either match or surpass those of leading U.S. competitors while being more cost-effective, challenging existing norms about the scale and investment required for successful AI deployment.
Implications of Global Competition
Zuckerberg acknowledged during discussions that the effects of DeepSeek’s emergence on Meta’s investment and budget strategies are still uncertain. However, he noted the potential for Meta to learn from the innovations DeepSeek has introduced. Zuckerberg stated, “There are several advancements they have made that we hope to integrate into our systems.”
The introduction of DeepSeek may increase investor scrutiny regarding Meta’s extensive AI expenditures. However, if Meta manages to leverage insights from its competition effectively, it could lead to reduced costs in developing and maintaining AI models.
Infrastructure and Workforce Developments
Meta is a leading purchaser of Nvidia’s high-demand AI chips, aiming to finish the year with over 1.3 million graphics processors (GPUs) and deliver about 1 gigawatt of computing power. To achieve its spending and strategic goals for 2025, the company also announced plans to reduce its workforce by laying off 5% of its lowest-performing employees, indicating a focus on enhancing overall performance.
