Google CEO downplays DeepSeek threat as the company plans to spend $75 billion on AI this year

• Google's own AI models can go toe to toe with DeepSeek, CEO Sundar Pichai said on Tuesday.
• On the company's Q4 earnings call, Pichai said Google had some of the most efficient models.
• Reasoning models are only accelerating the spend on inference, Pichai said.

Google CEO Sundar Pichai downplayed the impact of DeepSeek on Alphabet's business on Tuesday, telling investors and analysts that the search giant's AI models were comparable to those of the Chinese startup in terms of cost efficiency.

Google reported earnings on Tuesday and said it's planning $75 billion in capital expenditure this year, which was higher than the expected $57.9 billion from analysts surveyed by Bloomberg and weighed shares down 8% in postmarket trading.

In response to a question during the company's earnings call about DeepSeek, Pichai praised the startup's "tremendous" team and said that "for us, it's always been obvious" that frontier models could be made more efficient over time.

Pichai said Google's own Gemini models "shine" on the Pareto frontier — a series of optimal goals when it comes to cost, performance, and latency.

"If you look at all three attributes, I think we lead this Pareto frontier," said Pichai, citing Google's most recent 2.0 Flash thinking models. "They are some of the most efficient models out there, including comparing to DeepSeek's V3 and R1, and I think a lot of it is our strength of the full stack: development, end-to-end optimization, our obsession with cost-per-query."

The trillions of dollars Google and other tech giants are spending on AI have come under scrutiny after DeepSeek launched an AI model that competes with OpenAI's and that the startup said was trained at a fraction of the cost.

On the call, Pichai said that reasoning models were "accelerating" the trend of shifting more spending toward inference, or when an AI model makes conclusions or predictions once it's trained.

"Part of the reason we are so excited about the AI opportunity is, we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down, which will make more use cases feasible, and that's the opportunity space," Pichai said. "It's as big as it comes."

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