Microsoft’s ambitious push into artificial intelligence is facing growing investor doubts as the company prepares to release its latest earnings report. Despite heavy investment in OpenAI and plans to spend $80 billion on AI infrastructure this fiscal year, its Azure cloud business has shown slowing growth for two consecutive quarters. Analysts now question whether AI-driven demand will be enough to reignite momentum.
The tech giant’s stock has underperformed many of its peers, with further pressure mounting after Chinese startup DeepSeek introduced a cost-effective AI model, sparking concerns about US dominance in the sector. Meanwhile, Microsoft’s AI-powered Copilot assistant has struggled to gain widespread traction beyond pilot programmes, forcing the company to adjust pricing strategies in an attempt to drive adoption.
While Microsoft still handles most of OpenAI’s cloud traffic, competition in AI infrastructure is intensifying. With investor sentiment turning cautious, the upcoming earnings report will be a key test of whether AI investments can translate into sustainable revenue growth.
SoftBank is set to invest $500 million in SkildAI, a fast-growing AI robotics startup, at a valuation of $4 billion. The company, founded just two years ago, specialises in building AI models that can be adapted for different robotic applications. Previous investors include Jeff Bezos, Lightspeed Venture Partners, and Coatue Management, who contributed to a $300 million round last July.
The investment comes amid surging interest in AI-powered robotics, with major backers like Bezos ramping up funding in the sector. Startups such as Physical Intelligence and Figure AI have also secured hundreds of millions in recent months to develop advanced robotic “brains” and humanoid robots.
SkildAI’s latest funding highlights the growing competition in AI-driven automation, with investors betting on smarter, more adaptable robots. As demand for robotics expands across industries, firms like SkildAI are positioning themselves at the forefront of this technological revolution.
Hugging Face has introduced Inference Providers, a new feature that allows developers to run AI models on third-party cloud services. Partnering with companies like SambaNova, Fal, Replicate, and Together AI, the platform now offers users the flexibility to deploy models on different infrastructures directly from their project pages.
Previously, Hugging Face primarily focused on its in-house AI hosting solutions, but the company is shifting towards a more collaborative approach. By integrating with external serverless providers, developers can now scale their models without managing hardware, making deployment easier and more cost-efficient. Users will pay standard provider rates, and Hugging Face Pro subscribers will receive additional free credits.
Since its founding in 2016, Hugging Face has grown into a leading AI model hub, backed by major investors like Google, Amazon, and Nvidia. With its latest move, the company continues to expand its ecosystem, making AI more accessible for developers worldwide.
Donald Trump’s decision to ban the development of a United States Central Bank digital currency (CBDC) has shifted global momentum in the race to establish digital currencies. While the Federal Reserve has never shown strong interest in creating a digital dollar, the move sends a powerful signal internationally, leaving Europe and China as frontrunners in shaping global standards for CBDCs. Experts believe the US ban could enhance China’s influence, enabling it to push its digital yuan in developing countries while Europe advances plans for a digital euro.
Trump’s executive order prohibits US agencies from engaging in any CBDC-related activities, citing concerns over privacy, financial stability, and national sovereignty. Critics, including former allies of the CBDC concept, have raised fears about potential government surveillance through digital currencies. Meanwhile, some argue that stablecoins—private digital tokens pegged to the dollar—could serve as a temporary substitute, though this would require significant adjustments to existing financial systems.
The geopolitical implications of the US withdrawal are already emerging. Analysts see the move as a signal of “de-dollarisation,” with countries like Brazil continuing to develop their CBDCs despite the lack of US participation. The decision also puts collaborative international projects, such as those under the Bank for International Settlements, in jeopardy as they lose American involvement. Experts warn that without US engagement, the global CBDC landscape could shift in favour of China and Europe.
Italy’s data protection authority, the Garante, has ordered the Chinese AI startup DeepSeek to block its chatbot in the country, citing insufficient responses to queries about its privacy policy. The watchdog had requested detailed information on data collection practices, sources, purposes, and storage, particularly concerning whether user data is stored in China. DeepSeek’s failure to adequately address these concerns prompted the Garante to impose an immediate ban and launch an investigation.
DeepSeek had removed its AI assistant from Italian app stores earlier this week but claimed it was not subject to local regulation. Agostino Ghiglia, a member of the Garante’s board, stated that the company’s stance worsened its position. Italian users who had already downloaded the app still reported access to the chatbot, while the web version remains operational. The Garante emphasised that European citizens must have clear consent and data protection guarantees, especially regarding servers located in China.
The Garante’s action highlights growing scrutiny of AI platforms in Europe, with data regulators in Ireland and France also questioning DeepSeek’s privacy practices. Italy‘s proactive approach has drawn attention; the country temporarily banned ChatGPT in 2023 over similar concerns. DeepSeek has positioned its AI as a cost-effective alternative to US models, surpassing ChatGPT as the top-rated app on Apple’s US App Store. However, its refusal to cooperate with European regulators may jeopardise its expansion.
Global technology stocks experienced a sharp decline on Tuesday, with a second day of losses triggered by the emergence of a low-cost Chinese AI model. This new AI assistant, launched by China’s DeepSeek, has raised doubts about the dominance of established AI leaders like Nvidia and OpenAI. Nvidia’s shares plummeted 17% on Monday, erasing $593 billion from its market value. Other major tech companies such as Broadcom, Microsoft, and Alphabet also saw significant declines, fueling broader market concerns.
The unexpected launch of DeepSeek’s AI, which claims to use fewer data and lower costs than existing models, has disrupted the market, causing scepticism among investors. While OpenAI CEO Sam Altman praised the model, calling it ‘impressive,’ the sudden rise of a competitor from China has surprised many and highlighted the rapid pace of advancements in AI technology. This development has led to a global sell-off in tech stocks, with significant drops in companies across the US, Europe, and Japan.
The sell-off has raised concerns about the high valuations of AI and tech stocks, which have seen inflated prices due to the AI boom. Nvidia, for example, had been trading at nearly 60 times its earnings, far above the broader market’s 22 times. The market downturn underscores the risks tied to the heavy concentration of tech stocks in investor portfolios, with many fearing that the industry’s rapid expansion has created an unsustainable bubble.
This market shakeup also reflects the broader issue of leverage in the system, with investors increasingly borrowing to buy high-priced tech stocks. As a result, the unwinding of these positions, combined with algorithmic trading, has intensified the sell-off. With key earnings reports from companies like Apple and Microsoft expected this week, investors are closely watching how tech executives address concerns about capital spending and the future of AI investments.
OpenAI CEO Sam Altman has called Chinese startup DeepSeek’s R1 model “impressive,” highlighting its ability to deliver advanced AI performance at a fraction of the cost. According to DeepSeek, its R1 model is 20 to 50 times cheaper to use than OpenAI’s own models, offering significant affordability without sacrificing quality.
Chinese AI, DeepSeek gained global recognition last month when it revealed that training its DeepSeek-V3 model required less than $6 million in computing resources, leveraging lower-cost Nvidia H800 chips. In contrast, Altman noted that OpenAI remains committed to prioritising increased computing power, suggesting this as an important factor in achieving AI progress.
The emergence of DeepSeek has disrupted the AI industry, leading to a significant sell-off in tech stocks, including Nvidia, which recorded a historic single-day loss of $593 billion in market value. Analysts say DeepSeek’s cost-efficient approach raises doubts about the necessity of the massive financial investments made by US tech firms in AI development.
As DeepSeek continues to attract attention, the startup’s success underscores a shift in the AI market, with low-cost models challenging traditional notions of progress in AI.
Chinese AI startup DeepSeek has announced that its Janus-Pro-7B model has surpassed competitors, including OpenAI’s DALL-E 3 and Stability AI’s Stable Diffusion, in benchmark rankings for text-to-image generation. This achievement solidifies DeepSeek’s reputation as a key player in the rapidly evolving AI market.
According to a technical report, the Janus-Pro model builds upon its predecessor by incorporating enhanced training processes, higher-quality data, and advanced scaling, resulting in improved stability and more detailed image outputs. The company credited the inclusion of 72 million high-quality synthetic images, combined with real-world data, for the model’s superior performance.
This success follows the launch of DeepSeek’s new AI assistant based on the DeepSeek-V3 model, which has become the top-rated free app in the US Apple App Store. The news sent shockwaves through the tech industry, leading to declines in shares of companies like Nvidia and Oracle, as investors reassessed the competitive dynamics in AI development.
OpenAI and Stability AI have yet to comment on the claims. DeepSeek’s achievements highlight the growing influence of Chinese firms in cutting-edge AI innovation, setting the stage for heightened competition in the global tech market.
Microsoft’s upcoming quarterly forecast will reveal whether its significant investments in AI, including its partnership with OpenAI, drive growth in its key Azure cloud business. Despite earlier optimism, Azure’s growth has slowed for two consecutive quarters, and investors are anxious about Microsoft’s ability to monetise AI. The company has committed about $80 billion in capital spending this year, but doubts linger over the effectiveness of its strategy, especially after a sharp drop in stock price following the launch of a competitive AI model by Chinese startup DeepSeek.
Azure, which contributes around a third of Microsoft’s revenue, is expected to show 31.8% growth in the second quarter, a slight slowdown from the previous quarter. Microsoft’s relationship with OpenAI remains a key growth driver, with Azure set to handle much of OpenAI’s cloud traffic. However, investor sentiment has soured, with growing concerns about AI monetisation, margins, and capital expenditure. Microsoft also faces the impact of a stronger dollar, which could hurt its international earnings.
In addition to Azure, Microsoft is banking on the success of its Microsoft 365 Copilot AI assistant, but adoption has been slower than anticipated. To stimulate demand, the company has adjusted its pricing, adding AI features to lower-tier Microsoft 365 plans. While the Copilot’s potential remains high, analysts project a modest penetration rate of 10%, suggesting it could add significant revenue in the coming years. Despite these challenges, Microsoft’s productivity division, which includes 365 Copilot and LinkedIn, is expected to see continued growth.
Overall, Microsoft is forecasted to report slower growth for the second quarter, with revenue expected to rise by 10.9% compared to 16% in the first quarter. Net profit is also projected to increase at a slower pace, raising questions about whether the company’s AI investments will pay off as anticipated.
The launch of DeepSeek’s cost-efficient AI model has sent shockwaves through Australian tech markets, with shares in AI-related companies experiencing steep declines. Investors are increasingly worried that the Chinese startup’s affordable technology could undermine the dominance of established players in the sector.
Among the biggest losers were AI software firm Appen, which saw its stock drop by 3.3%, and chipmaker Brainchip, which lost 10.3%. The technology sub-index fell by 1%, with major data centre operators also taking a hit. Analysts expressed concerns that DeepSeek’s success might reduce demand for AI infrastructure, which had driven heavy investments in Australian data centres.
DeepSeek’s AI assistant, launched last week, has already outpaced US competitor ChatGPT in downloads on Apple’s App Store. This rapid rise has sent ripples through the global tech sector, contributing to Nvidia’s record $592.7 billion market loss.
As Australian investors reassess their exposure to AI stocks, market strategists predict a shift towards safer sectors such as healthcare and consumer staples, after DeepSeek’s disruptive impact.
