Why Wall Street did not punish Apple and how the tech giant can benefit the most from China’s DeepSeek

Using DeepSeek's AI models and integrating them into its hardware aligns well with Apple’s strategy and keeps the company competitive in the AI race without reinventing the wheel or moving away from its core business model.

When a small Chinese AI lab shocked the world this week with a cutting-edge LLM model that rivaled those from OpenAI and Google, but built at a fraction of the cost and computing power, US tech stocks suffered a $1 trillion wipeout. Almost all major tech companies, including Microsoft, Nvidia, Alphabet, and Meta Platforms, saw their stocks plummet. There was an exception though: Apple. The tech giant’s shares rose this week, despite an 11.1 per cent decline in sales in China as the company reported its quarterly earnings.

This begs the question: why didn’t Wall Street react to Apple the way it did to Nvidia or Alphabet? Well, Apple was never at the heart of the AI boom like Nvidia and other big U.S. tech companies, nor did Cupertino pump billions into creating AI infrastructure. Apple’s conservative outlook on AI and its approach to partnering with other tech companies and integrating their AI models into its own hardware may validate that the company was always right about taking a slow and steady approach to artificial intelligence, limiting its exposure to the AI bubble that had been building for months—despite Apple battling the narrative that it was lagging behind in the AI race.

It just shows that Apple’s hidebound, old-school approach may have saved the company—something no one anticipated when everyone criticised the iPhone maker for not taking risks and being way behind the curve in investing in generative AI. Apple has a reputation for being cautious, and although it did launch the Apple Intelligence suite of AI features.

But fears that Chinese startup DeepSeek’s open-source approach can flip the narrative and change the trajectory of AI beyond the questions of training costs and capital investment levels, could actually help Apple. So far, AI has been perceived through the lens of how Silicon Valley wanted to set the narrative—i.e., scaling up AI is only possible by investing more. In reality, however, each of the major American tech companies were biting their own tails, promising that once AI was fully developed the profits would be distributed within the closed circle. After all, the biggest buyers of AI technology were themselves. DeepSeek has challenged this status quo, which is why everyone is rushing back to the drawing board and looking for alternative models.

For Apple, though, the benefit is that it has always been in the consumer space and has never focused on the enterprise space like Microsoft. Additionally, its short-term profits are not tied to generative AI. DeepSeek’s approach to AI will take AI to the masses, and Apple’s strategy has also been the same, as it is so strong with its hardware and has the backing of the iPhones and Macs.