Key takeaways from 3 major tech companies’ earnings reports this week

This week, the tech world was abuzz with unexpected news that a little-known Chinese AI startup, DeepSeek, had developed a new large language AI model that surpassed the capabilities of OpenAI’s ChatGPT. This revelation sent shockwaves through the market, causing many AI-related stocks to plummet by 20% or more. NVIDIA Corporation, in particular, saw a 17% drop before making a partial recovery later in the week.

The expected focus of the week was meant to be on fourth-quarter earnings announcements from major tech players, with Meta Platforms, Microsoft Corporation, and Tesla reporting on Wednesday, followed by Apple Inc. on Thursday. Alphabet and Amazon were slated to report the following week, with NVIDIA wrapping up the earnings season. Despite this initial plan, the DeepSeek news became a significant talking point in the tech world.

Meta Platforms reported a 20.6% year-over-year increase in fourth-quarter revenue to $48.38 billion, beating Wall Street’s estimates. Earnings per share also rose by 50.5% to $8.02, surpassing analysts’ expectations. The company’s Reality Labs division saw a slight increase in sales but recorded nearly $5 billion in losses. CEO Mark Zuckerberg emphasized the pivotal role of the Metaverse in the company’s future and acknowledged the significant investments being made in this space. Regarding DeepSeek, Zuckerberg noted that they were still evaluating the innovations brought forth by the startup.

Microsoft Corporation reported second-quarter earnings of $3.23 per share, a 10.2% year-over-year increase, and revenue of $69.6 billion, up 12.3% from the previous year. However, the company’s Cloud segment revenue fell short of expectations, leading to a 6% drop in the stock. CEO Satya Nadella expressed optimism about the advancements in AI by DeepSeek, highlighting the potential for increased ubiquity of AI.

Apple Inc. reported earnings of $2.40 per share for its first quarter in fiscal year 2025, slightly exceeding analysts’ estimates. While iPhone sales declined, the Services business continued to thrive. CEO Tim Cook addressed the impact of DeepSeek by emphasizing the importance of innovation for efficiency and reiterating Apple’s commitment to integrating silicon and software for future success.

Overall, the unexpected developments with DeepSeek added an element of uncertainty to an otherwise eventful week in the tech sector. Despite the initial disruptions caused by the startup’s advancements, major tech companies demonstrated resilience and adaptability in navigating the evolving landscape of artificial intelligence and technological innovation.