Welcome to The Week Ahead! Your Forward-Focused Dispatch on Digital Infrastructure. Delivered every Monday, this newsletter breaks down the most significant finance and investment developments and trends in the world of digital infrastructure this week. Gain access to all our premium content, including news, features, videos, and podcasts, by registering for a The Tech Capital account here.

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IN FOCUS

In this week’s newsletter, we look at:

• From Beijing to Wall Street: Investors Hurry to Quell DeepSeek Fears;
• Zayo closing in on Crown Castle fibre deal: How did we get here?;
• The Tech Capital is headed to Amsterdam as the official media partner for the annual Kickstart Conference.

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Dear Reader,

The digital infrastructure sector never sleeps, and January has been incredibly busy. As we move into February, the pace shows no signs of slowing down.

Data centre mergers and acquisitions are on the rise, with at least US$22 billion already in the pipeline. Earnings calls are drawing attention to data centres and AI, while industry events fill up the calendar.

One thing that has become clear on the back of the last two weeks’ big story – that of course being DeepSeek’s appearance in the global arena – is that as the dust settles on this technological upheaval, the investment community’s response paints a picture of cautious optimism. The coming months will undoubtedly be crucial as the full implications of DeepSeek’s advancements unfold.

And we will be measuring that whilst attending KickStart in Amsterdam with over 1,000 colleagues. We will also be covering important developments in AI, data centre openings, cable deployments, and cell tower expansions.

Looking ahead, we are excited about our upcoming events including InfraAI Global Summit in the Athenian Riviera, the 4th annual International Finance Forum in London (including Nordic Finance Forum), and the 2025 Global Awards (submissions still open). For more details, please visit our website.

We encourage you to engage with us on social media and subscribe to our daily newsletter. At The Tech Capital, we believe in the power of community and shared knowledge.

You Lead. We Report.

Best regards,

The Newsroom

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THE BIG STORY

From Beijing to Wall Street: Investors Hurry to Quell DeepSeek Fears

Here’s what happened:

Chinese AI company DeepSeek has unleashed a technological tour de force that has captivated the AI world and sent shockwaves through financial markets. The repercussions of its launch – or rapid ascent – have been swift and far-reaching, with over US$1 trillion wiped off AI-exposed stocks, leaving big tech and data centre stocks reeling in its wake.

The financial tremors were felt acutely on 27 January 2025, as US technology stocks experienced a significant downturn. The tech-heavy Nasdaq Composite index plummeted by 2.77%, while the broader S&P 500 shed 1.61% of its value. The Dow Jones Industrial Average, less exposed to the tech sector, weathered the storm comparatively well, dropping a modest 0.1%.

Amidst this tumultuous market reaction, investment houses and infrastructure players have been quick to respond.

Blackstone Group Inc. (NYSE: BX) has shared a “cautious optimism” tone. The private equity giant, having invested US$80 billion in data centres, finds itself at a critical juncture. Jonathan Gray, president of Blackstone, addressed the potential implications during the firm’s fourth-quarter earnings call. Gray’s commentary reflected a nuanced understanding of the situation: “This does highlight the fact that compute costs are going to come down, and adoption is probably going to accelerate. It is possible the use cases for data centres may change.”

Despite these considerations, Gray emphasised that Blackstone’s major customers have not altered their plans, and the firm currently maintains its ambitious investment goals in the sector. He noted: “We are still evaluating it. We are talking to people about it, and at this point, we still see a lot of need for digital infrastructure and power. We still think this is a very favourable place to deploy capital.”

Brookfield Infrastructure Partners say DeepSeek are a reminder that everyone needs to prepare to “anticipate technological evolution” at any moment. Roberto Marcogliese, Brookfield’s managing partner for infrastructure and head of data for the Americas told investors such a breakthrough had been anticipated: “We never really expected that demand for compute would scale on a straight line basis. Our expectation, as we have seen [with] a number of other technologies, is that we will always see a level of continuous improvement, whether it’s at the server and hardware level or at the software level.”

Marcogliese’s analysis suggests that these improvements will “be offset by new use cases” with more complex needs, such as robotics, which will require more compute power.

He added: “The DeepSeek announcement, from our perspective, is really just a piece of that improvement puzzle. We expect more advancements to come as we’re still in the very early innings of this technology cycle.”

RBC Capital Markets has however raised geopolitical considerations. In a note to investors, the bank posited that DeepSeek’s sudden rise to fame might be a strategic move from China to highlight its AI prowess, potentially aimed at gaining leverage in ongoing trade negotiations with the United States.

This takes into account the new US administration and the ongoing TikTok ownership debate, as well as the 10% tariff imposed on Chinese imports by President Trump over the weekend.

The industry consensus over the past days has been one of measured optimism. Despite the market turbulence, industry operators, including AI hyperscalers, banks, and legal experts, have conveyed to The Tech Capital that DeepSeek’s impact may be less dramatic than current headlines suggest.

These experts report that investments have continued unabated, with no clients pausing contracts, halting construction, or seeking to renegotiate terms. This potentially signals that Western infrastructure players will maintain their course, undeterred by the current hype surrounding DeepSeek’s breakthrough.

Here’s our take:

The emergence of DeepSeek as an almost out-of-the-blue big player in the AI arena has had profound implications for the global tech landscape and investment strategies. Nevertheless, this rapid ascent also raises several critical points for consideration.

DeepSeek’s purported ability to create a competitive AI model at a fraction of the cost of Western counterparts could potentially democratise access to advanced AI capabilities. This may force established players to reassess their development strategies and cost structures. But is it all as it seems? There are several questions left to answer, including:

• What is the true cost structure of DeepSeek’s AI model, and how does it compare to Western counterparts when accounting for infrastructure costs?
• How will Western regulators respond to the growing influence of Chinese AI companies in their markets?
• Can DeepSeek maintain its competitive edge as it scales up operations and faces increased scrutiny?
• How will established tech giants adapt their AI strategies in response to this new competitive landscape?
• What long-term impact will this development have on global AI research collaboration and talent flow?

Against the backdrop of the geopolitical narrative, comparing a US$6 million AI investment on one side of the chessboard with a US$500 billion investment on the other was likely too good to ignore for many covering the news. But it’s crucial to distinguish between software development costs and the substantial infrastructure investments required for large-scale AI operations.

The market’s reaction so far exposes the volatility inherent in AI-related investments. Investment firms like Blackstone and Brookfield were forced to justify and re-evaluate their substantial commitments to data centre and AI infrastructure projects in light of potentially shifting technological paradigms.

DeepSeek’s approach also reignites the discussion on the merits and risks of open-source versus proprietary AI models, particularly in terms of security, innovation speed, and market adoption. We might be entering a new age for open source which since 2018/19 has gone slightly unnoticed in the data centre world.

Furthermore, the success of a Chinese AI company in Western markets raises questions about user adoption, data privacy concerns, and potential regulatory hurdles.

The DeepSeek phenomenon serves as a stark reminder of the rapid pace of innovation in AI and the potential for disruptive technologies to emerge from unexpected quarters. The past few weeks we have been talking about a Chinese AI model, but soon others might emerge – and we should not assume they will come for G7 economies only.

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LONG READS

• Zayo closing in on Crown Castle fibre deal: How did we get here?

The Tech Capital presents a comprehensive history of Crown Castle’s Fibre business, exploring its investment thesis, underperformance and why its being sold. Read more here

• Exclusive: More M&A to closely follow Keysource deal says Salute CEO

“Within the next 30 to 60 days, you’re going to have two others” Erich Sanchack tells The Tech Capital. Read more here

• Is the worst over? Global investment houses evaluate DeepSeek’s impact 24 hours post-stock plunge

From the White House to Wall Street, everyone is seeking to understand how tech giants are grappling with the dizzying ascent of DeepSeek’s cost-efficient AI, and what implications does this have for the industry’s established hierarchy. Read more here

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QUOTE OF THE WEEK

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WEEK IN PREVIEW

This week, The Tech Capital is headed to Amsterdam as the official media partner for the annual Kickstart Conference so expect lots of coverage from the “Venice of the North”. From a stock market perspective, this week presents a diverse range of earnings reports from tech giants, semiconductor companies, and financial firms. Here’s a few of them:

• Google (Alphabet: GOOG) – Tuesday, February 4, 2025: Analysts expect strong performance driven by continued growth in cloud services and AI integration. The consensus EPS estimate is $1.08, reflecting the company’s consistent profitability. Investors will be keenly watching for updates on Google’s AI initiatives and their impact across product lines, especially in the post-DeepSeek period. The recent focus on cost-cutting measures and efficiency improvements may also be a topic of interest during the earnings call.
• AMD (AMD) – Tuesday, February 4, 2025: AMD is set to report its Q4 2024 and full year 2024 financial results. The company has been making significant strides in the CPU and GPU markets and analysts and investors will be looking for updates on AMD’s market share gains, particularly in the data centre and AI segments. The performance of its Ryzen processors and EPYC server chips will be key focal points.
• KKR (KKR) – Tuesday, February 4, 2025: KKR’s results will provide insights into the private equity and alternative asset management sectors. Investors will be interested in the firm’s investment performance, fundraising activities, and outlook on market opportunities in various sectors, particularly, across secondaries such as digital infrastructure.
• Qualcomm (QCOM) – Wednesday, February 5, 2025: For Q1 fiscal year 2025 earnings, the company has provided EPS guidance of $2.85-$3.05 for the period, compared to the consensus estimate of $2.86. Revenue guidance is set between $10.5 billion and $11.3 billion. Investors will be particularly interested in Qualcomm’s progress in 5G technology adoption and its positioning in the evolving semiconductor market.
• Amazon (AMZN) – Thursday, February 6, 2025: The consensus revenue expectation is approximately $187.4 billion, representing a year-over-year increase. Key areas of focus will be the performance of Amazon’s online retail business during the crucial holiday period and the continued growth of AWS. Investors will also be looking for insights into the company’s AI integration efforts and their impact on various business segments.

For the latest The Tech Capital financial results coverage, visit here.

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TTC CONFERENCES

The Tech Capital Global Awards 2025 presents a compelling opportunity for professionals and organisations in the digital infrastructure sector.

The Tech Capital Global Awards 2025 covers a wide range of categories, ensuring that various aspects of digital infrastructure finance and development are recognised. From deal-making to sustainability initiatives, the awards programme offers multiple avenues for showcasing your organisation’s strengths and achievements.

To participate, ensure that your submission adheres to the 900-word limit and includes any relevant supporting materials. The awards are free to enter, although attendance at the Awards Show & Dinner requires the purchase of a ticket.

Consider submitting your entry before the 14 February deadline to position your organisation at the forefront of digital infrastructure innovation and excellence.

For more information, visit here.

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MOST READ LAST WEEK

• Blackstone weighs DeepSeek’s low-cost AI model against $80bn data centre investment – Full story
• Exclusive: 1.2GW Lancium Clean Campus confirmed as home of Project Stargate – Full story
• Microsoft’s cloud growth slows, Q2 revenue hits $69.6bn as AI spending ramps up – Full story
• Data centre M&A deals surge to record $73bn in 2024 – Full story
• Global investment firm KKR to restructure $157bn portfolio to capitalise on data centre surge – Full story
• TikTok secures $3.8bn investment approval for Thai data centre project – Full story
• Hedge funds recalibrate positions as DigitalBridge attracts new investment – Full story
• Repsol’s $4.2bn data centre plan signals shift in strategy for Spanish oil giant – Full story
• Zayo to build 5,000km of fibre as AI sales top $4 billion – Full story
• Microsoft expands data centre platform with 240-acre acquisition in Wisconsin – Full story

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WATCH ON THE TECH CAPITAL

The escalating energy crisis is reshaping the landscape of data centre development across the United States. Once a localised issue in Northern Virginia, Jonathan Beckham, a partner at Akerman LLP’s Digital Infrastructure Group explains to The Tech Capital that the power supply challenge has now become a nationwide concern, forcing data centre operators to rethink site selection, financing, and infrastructure development.

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LISTEN ON THE TECH CAPITAL

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INDUSTRY CALENDAR

• Kickstart Europe Amsterdam – 4-5 Feb 2025 LEARN MORE
• Digital Garden Tokyo – 17-18 Mar 2025 LEARN MORE Use techcapital@DGT and enjoy an exclusive 10% off the total price
• The Tech Capital International Finance Forum & Global Awards London– 12-13 May 2025 LEARN MORE
• InfraAI Summit’25, by The Tech Capital Athens Riviera – 26-27 March 2025 LEARN MORE
• The Tech Capital APAC Finance Forum Singapore – 25 September 2025 LEARN MORE
• The Tech Capital LATAM Finance Forum São Paulo – 03 July 2025 LEARN MORE
• infra/STRUCTURE Summit Las Vegas – 15-16 October 2025 LEARN MORE
• The Tech Capital Middle East & Africa Finance Forum Abu Dhabi – 03 December 2025 LEARN MORE

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