Microsoft -Results highlight AI expenses are not slower

Microsoft (MSFT) shares act lower after the tech giant’s sky revenue missed, overthrowing its earnings company. The earnings report comes right after China’s Deepseek announced a new model that raises concerns about US companies’ ability to compete.

Keybanc Capital Markets Equity Research Analyst Jackson Ader joins Morning short With Seana Smith and Brad Smith to discuss what Microsoft’s results signalize about the artificial intelligence (AI) landscape.

“Microsoft continues to submit the way (capital expenses) CAPEX use,” says Ader, adding, “they are a $ 3 trillion plus company so they have cash to overs.”

Microsoft’s capital costs hit $ 22.6 billion over the second quarter of fiscal. “They expect the figures in the third quarter and the fourth quarter to be in line with it and then probably grow next year,” says Ader, noting that the hectic spending is planning any concern for Big Tech that withdraws at AI investments.

The analyst explains that part of what drives Big Tech’s massive AI expenses is “the uncertainty in the amount of calculation” needed for the rapidly evolving tech.

“The AI ​​version of the cloud looks a bit more like the internet, where we think we will use a ton of it, but we are not really sure how much we want to use,” explains Ader. “The added uncertainty means that you have to spend a lot of money without predetermined ROI, and without (a) predetermined total ownership costs that come down that we had in Sky 1.0, creates a little bit of extra risk.”

On the question of Deepseek’s progress and what it means for other AI players like Microsoft, Ader says ADE that the Chinese AI starts can actually benefit Microsoft.

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This post was written by Naomi Buchanan.