Microsoft: Embracing DeepSeek AI, Offering It to Customers

Microsoft Corporation (NASDAQ:MSFT) has made headlines recently by announcing its decision to integrate Chinese startup DeepSeek's R1 artificial intelligence (AI) model into its Azure AI Foundry platform and GitHub. This move comes amidst significant market shifts and growing recognition of DeepSeek's AI capabilities. Let's delve into the potential benefits and risks of this decision and its impact on Microsoft's stock performance in the long term.



Potential Benefits:

1. Expanding Model Catalog: By adding DeepSeek's R1 model to its Azure AI Foundry platform, Microsoft is expanding its model catalog, providing customers with more options to integrate AI into their applications (Microsoft, 2025).
2. Attracting New Customers: DeepSeek's R1 model has gained significant global recognition, with over 2.6 million downloads as of January 2025. Integrating this model into Azure AI Foundry could attract new customers who are interested in leveraging DeepSeek's advanced models (Microsoft, 2025).
3. Cost-Effective Development: DeepSeek-R1 was developed for just $6 million, compared to $100 million for OpenAI's GPT-4. This cost-effectiveness could lead to increased adoption and revenue for Microsoft (Microsoft, 2025).

Potential Risks:

1. Potential Data Exfiltration: Microsoft has reportedly initiated a probe into DeepSeek's potential abuse of its and OpenAI's services. According to security researchers working for Microsoft, DeepSeek may have exfiltrated a large amount of data using OpenAI's API in the fall of 2024. If this is confirmed, it could damage Microsoft's reputation and lead to potential legal and financial consequences (Bloomberg, 2025).
2. Censorship Concerns: DeepSeek's R1 model has been criticized for providing inaccurate answers or non-answers 83% of the time when asked about news-related topics and refusing to answer 85% of prompts related to China. This could raise concerns about censorship and impact Microsoft's stock performance if customers perceive the model as unreliable or biased (NewsGuard, 2025).
3. Market Impact: DeepSeek's open-source large language models (LLMs) have rattled the valuations of many stocks in the Majestic 7, including Microsoft Corporation (NASDAQ:MSFT), which plunged around 4% on news of the impact. This market impact could continue to affect Microsoft's stock performance in the long term (tupungato, 2025).



In conclusion, Microsoft's integration of DeepSeek's R1 model into its Azure AI Foundry platform could provide benefits such as expanding the model catalog, attracting new customers, and leveraging cost-effective development. However, potential risks include data exfiltration, censorship concerns, and market impact. The long-term impact on Microsoft's stock performance will depend on how effectively the company manages these risks and capitalizes on the benefits.

Important note: Investors are reminded to do their due diligence and not rely on the information provided as financial advice. Consider this article as supplementing your required research. Please always apply independent thinking.