(Bloomberg) — Microsoft Corp. Chief Executive Officer Satya Nadella had some kind words for DeepSeek, the Chinese artificial intelligence startup that roiled his company’s shares earlier this week.
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The upstart stunned the US tech industry with an open-source AI model called R1 that it claims rivals or outperforms the talents of western technology but at a fraction of the associated fee.
“DeepSeek has had some real innovations,” Nadella said during an investor call after Microsoft reported quarterly results on Wednesday. “Obviously now that every one gets commoditized and it’s going to get broadly used.”
DeepSeek’s feat prompted investors to wonder if Nadella’s company must spend a lot money on AI infrastructure. Couldn’t Microsoft and partner OpenAI train its AI models and handle user queries — a process referred to as inferencing — more cheaply?
Nadella said they have already got been doing exactly that.
“We ourselves have been seeing significant efficiency gains each in training and inference for years now,” he said. Microsoft has used its software to wring higher performance and value savings from each latest generation of AI models and AI hardware, Nadella said.
He said Microsoft did lots of the work in partnership with OpenAI. It’s not enough to release the perfect latest model, he added. You may have to make it cost-effective to make use of. “If it’s too expensive to serve, it’s no good, right?” he said.
Microsoft still plans to spend $80 billion on data centers this fiscal yr to assist it meet demand from customers for its AI products, though the corporate expects the expansion in expenses to taper off in fiscal 2026, which starts July 1.
On Tuesday, Bloomberg News reported that Microsoft and OpenAI are investigating whether a bunch linked to DeepSeek had obtained data output from OpenAI’s technology without authorization.
That hasn’t stopped Microsoft from offering DeepSeek’s model to customers. On Wednesday, the corporate said it had added R1 to its Azure AI Foundry, a repository of greater than 1,800 models that corporations can use to design and manage AI programs.
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