Meta's AI Spending Sparks Selloff, DeepSeek Raises $15 Billion

Full transcript

Alex: Good morning, and welcome to Daily Tech News for Friday, October twenty-third, twenty twenty-six. I am Alex.

Jordan: And I am Jordan. Today the bill for the A I boom came due on Wall Street, China's biggest A I lab raised a mountain of cash, a popular hosting platform told every customer to change their secrets, and a legendary game studio closed its doors.

Alex: Let us start with the markets, because Thursday was the worst day for tech stocks since June. The Nasdaq fell two point six percent, the S and P five hundred fell one point two percent, and chip stocks fell even harder.

Jordan: And the strange part is that this started with good earnings, right? Meta actually beat expectations.

Alex: Exactly. Meta's revenue rose twenty-six percent to sixty-four point six billion dollars, which beat forecasts. But investors stopped listening to the revenue line and started reading the bill. Meta disclosed that its future lease and contract commitments now total about eight hundred twenty-five billion dollars, up from about seven hundred billion dollars back in July, and most of that is A I computing power and infrastructure.

Jordan: Eight hundred twenty-five billion dollars in commitments. That is a second company hiding inside the first one.

Alex: And there is more. Meta posted its first cash outflow in more than a decade. It raised the floor for its twenty twenty-six capital spending to between one hundred thirty-five billion and one hundred forty-five billion dollars. And it announced a plan to issue a new class of non-voting shares to help raise the money. Meta's stock fell about seven percent on the day.

Jordan: What about the chip side? They were not the ones reporting earnings.

Alex: They got pulled in anyway. A M D fell about eight percent, Micron about six percent, and Nvidia about four percent. Nvidia's C E O, Jensen Huang, told C N B C that demand for the smaller A I cloud companies, the so-called neoclouds, is off the charts, but that capital to fund their growth is scarce. CoreWeave, the biggest of those neoclouds, fell about ten percent.

Jordan: So is this the A I bubble popping, or something narrower?

Alex: Narrower, based on what traders actually did. Money rotated into defensive stocks like food, utilities, and health care, and the average stock outside the A I trade actually rose on the day. Investors are not saying demand for A I is fake. They are asking who pays for the buildout, and how fast the returns show up.

Jordan: Which is a perfect bridge to story two, because while American investors were questioning A I spending, Chinese investors were doubling down on it.

Alex: They were. The Wall Street Journal, Bloomberg, and Reuters all reported on Thursday that DeepSeek has raised about fifteen billion dollars, roughly one hundred billion yuan, in its second private funding round, at a valuation of roughly seventy-four billion dollars before the new money went in.

Jordan: Who is writing checks that size for a Chinese A I lab?

Alex: Reported backers include C A T L, the world's biggest battery maker, and Tencent, the company behind WeChat, among more than fifteen investors. Founder Liang Wenfeng told investors in September that DeepSeek's annualized revenue run rate had reached one billion dollars, more than double the figure reported in the middle of the year, driven mostly by companies paying to access its models.

Jordan: And the endgame here is a public listing, sooner than people expected.

Alex: Right. DeepSeek is speeding up plans to list in Shanghai in early twenty twenty-seven, which means it could reach public markets before OpenAI does. The raise also landed just two days after the U S government ordered federal civilian agencies to remove DeepSeek's technology from their systems over security concerns.

Jordan: One caveat before we move on. This is reported by major outlets citing people familiar with the matter, but DeepSeek has not confirmed the terms on the record, so the final numbers could still shift.

Alex: Story three is a security one, with homework attached for a lot of developers. Railway, the platform that hosts apps and databases for about two million builders, disclosed on Wednesday that an attacker got into the systems where it stores customer environment variables, and that for some of those variables, the attacker got the decrypted contents.

Jordan: For anyone who does not live in this world, environment variables are where an app keeps its secrets, correct?

Alex: That is exactly right. They hold A I provider keys, database passwords, and payment credentials, all in one place. Railway paused deployments across the whole platform, invalidated login sessions and storage credentials, and by Thursday it had invalidated every Railway A P I token in existence.

Jordan: What is Railway telling customers to do?

Alex: Rotate everything. And the order matters, because changing a value inside Railway does not kill the old key. The old key stays valid at OpenAI, or Stripe, or your database provider, until you revoke it there. Railway also wants customers to rotate database credentials and check their A I and billing dashboards for unusual usage going back to October twentieth. It believes this was part of a broader pattern of attacks on platform companies aimed at stealing A I provider keys.

Jordan: The practical lesson writes itself. One key per app, a spending limit on every key, and when a platform you use reports a breach, the keys that lived there get rotated that day, not next week. Builds came back for Railway's Pro and Enterprise customers on Thursday, with the smaller plans still being switched back on.

Alex: Our last story is a sad one for gamers. Electronic Arts is shutting down BioWare, closing its Edmonton studio, and ending early development on the next Mass Effect game.

Jordan: BioWare is one of the studios that defined role-playing games. Baldur's Gate, Star Wars Knights of the Old Republic, Dragon Age, and Mass Effect all came out of that building.

Alex: Founded in nineteen ninety-five and bought by E A in two thousand seven, the studio's next Mass Effect had been announced back in twenty twenty but was never shown beyond teasers. Bloomberg reports that about four hundred jobs are being cut across E A, roughly three percent of the company, including about fifty people at BioWare.

Jordan: And the context is the buyout. This is not really about one game's sales.

Alex: It is about debt arithmetic. E A went private two months ago in a fifty-five billion dollar buyout led by Saudi Arabia's Public Investment Fund. That deal left the company carrying about eighteen billion dollars of debt and roughly one point eight billion dollars a year in interest, and E A had promised investors about seven hundred million dollars in annual cost reductions. E A says it will concentrate on fewer, larger games, and work continues on its Marvel Iron Man game and the next Star Wars Jedi title.

Jordan: So to recap. Investors flinched at the size of the A I bill, with Meta's eight hundred twenty-five billion dollars in commitments at the center of it. DeepSeek raised a reported fifteen billion dollars and may beat OpenAI to the public markets. Railway customers are rotating every secret they own. And BioWare, after three decades, is gone.

Alex: The thread running through all four stories is money, and what it buys. Compute, in Meta's case. Independence, in DeepSeek's case. Trust, in Railway's case. And time, which turned out to be the one thing BioWare's new owners were not willing to buy. That is Daily Tech News for Friday, October twenty-third. I am Alex.

Jordan: And I am Jordan. Patch your servers, rotate your keys, and we will see you tomorrow.