The AI double take

A day after Monday's DeepSeek-induced market frenzy, a relative calm set in as AI leaders and tech companies assessed how new assumptions in the AI economy may affect their own trajectories.

State of play: Executives see a path to lower operating costs.

• "Businesses are already champing at the bit to use the Chinese [DeepSeek R1] model in their products because it's so cheap compared to American ones," The Information's Jon Victor reports in Applied AI.
• That prospect of more efficient spending continued to be reflected in markets today. Apple's stock, for instance, jumped for a second day and is up 7% on the week.

Whether spending itself could fall, all eyes are on Big Tech and the billions pouring into AI based on potentially old assumptions. Analysts are watching whether the giants will see an opportunity to dial back on the horizon.

• Two of them — Meta and Microsoft — report earnings tomorrow, where they'll likely face early questions on this.
• Nvidia, a recipient of a lot of that existing spending, bore the brunt of investors' fears yesterday. Today, the stock pared some of those losses, but it's still down over 10% this week.

Longer term, cloud providers could be salivating, as the value of those businesses increase as prices fall for AI large-language models, Morningstar analyst Dan Romanoff writes. Beneficiaries of that could include Amazon, Microsoft and Google.

• And business app makers are pumped, too, as lower costs for AI computing could drive better margins, Bank of America analyst Brad Sills writes.