- China’s DeepSeek has roiled tech markets.
- Apple’s stock, however, rose on Monday while competitors like Alphabet and Microsoft dropped.
- Apple’s AI strategy focuses on integration, not cutting-edge model development, analysts said.
Big Tech is reeling from the seemingly sudden popularity of a big new Chinese AI name, but Apple could stand to benefit from a disruption to its competitors’ efforts.
DeepSeek, a Chinese AI startup, released AI model R1 on January 20, and the tech community reacted strongly to the LLM that could threaten some of the biggest US players in AI, including Google, Microsoft, and OpenAI.
One of the reasons DeepSeek has spooked markets is that it appears to deliver similarly effective models to US companies’ ones but at a much lower price and with fewer chips.
That undercuts Google, OpenAI, and others’ ability to charge premium pricing to access the best of their AI models. Major chipmaker ASML fell 7% in Amsterdam, while AI chip giant Nvidia fell more than 17% in New York.
Apple, however, is in a good position, tech analysts told Business Insider. Its stock rose on Monday, while competitors Alphabet and Microsoft traded down.
“Apple would be a beneficiary if the cost of AI training declined,” Gene Munster, managing partner at Deepwater Asset Management, said.
One reason Apple stands to get a win from cheaper AI training is because it “rightly focuses on how to integrate AI as a product, rather than building the most cutting-edge models,” William Kerwin, tech analyst at Morningstar, said.
It could integrate LLM models and improve Apple Intelligence at a cheaper rate than competitors, and ultimately keep costs down for consumers, Kerwin said.
If DeepSeek proves that powerful AI capabilities are achievable for a fraction of what companies are currently spending, it could “benefit Apple by leveling the playing field and allowing it to accelerate AI integration plans without making excessive capital expenditures,” Jacob Bourne, analyst at BI sister company EMARKETER, said.
Apple has been criticized in the past for being slow to put out its AI offerings. It released Apple Intelligence software last year months after Big Tech competitors and years after OpenAI launched ChatGPT.
By spending less on AI infrastructure, Bourne said, Apple has some insulation from the fallout its US competitors are facing.
Apple didn’t immediately respond to a request for comment from Business Insider.
Tech leaders like Alphabet CEO Sundar Pichai and Meta’s Mark Zuckerberg have maintained that investing heavily in AI was worth the risk — Meta is expected to invest over $60 billion in AI infrastructure in 2025, for example.
Apple’s AI spending seems to be lower, however. Although the iPhone maker hasn’t disclosed exactly what it spent on AI in 2024, it reported $45.6 billion in payments for property, plant, and equipment in fiscal 2024 — up from $43.7 billion in 2023. These costs include more than just potential AI spending.
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