Microsoft CFO tells employees to ‘focus’ as DeepSeek release raises questions on AI spending: Report

A particular case is the joint venture by Microsoft-backed OpenAI, Oracle, and SoftBank called Stargate which would spend $500 billion on AI infrastructure

Microsoft chief financial officer (CFO) told employees in an internal memo to keep their heads down and focus, according to a Business Insider report.

Kevin Scott, executive vice president of AI and chief technology officer of Microsoft Corp., right, and Sam Altman, chief executive officer of OpenAI, at the Microsoft Build event in Seattle, Washington, US, on Tuesday, May 21, 2024. The event allows attendees to grow their skills in topics such as building copilots, generative AI, securing applications, cloud platforms, and low-code(Chona Kasinger/Bloomberg)

This comes as Chinese artificial intelligence (AI) startup DeepSeek's new model got launched, competing with the Microsoft-backed OpenAI at a fraction of the cost.

This ended up raising questions from investors about the possibility of returns from AI due to the huge spending by other tech giants on it.

A particular case is the joint venture by OpenAI, Oracle, and SoftBank called Stargate which would spend $500 billion on AI infrastructure.

Even Microsoft plans to invest $80 billion into this in 2025 alone.

"There has been a lot of AI-related news this week, but our focus is clear: delivering real-world AI solutions while simultaneously globally scaling our cloud and AI infrastructure to support our partners and customers as they adopt, build, and grow as well," the report quoted Hood as writing in her email.

“As a company, we remain steadfast in the priorities which are required to deliver on that product promise — security, quality, and AI innovation. Thank you for your focus as we work together for our customers who rely on us,” she added

Hood sends the emails quarterly whenever Microsoft reports its earnings. This time, it reported its AI and cloud computing services grew less than expected. As a result, the company's stock also dropped.

The stock price fall also comes as a result of Deepseek's AI which ended up tanking even the tech-heavy Nasdaq Composite Index.