How Does the DeepSeek Panic Impact Apple?

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The launch of a new AI app, DeepSeek, has shocked the tech and investment community. The new AI platform has seemingly accomplished performance on par with rivals like ChatGPT and Grok at only a fraction of the cost and computing power.
DeepSeek’s sudden rise to popularity scared the pants off investors as they dumped tech stocks. Monday, AI chipmaker Nvidia lost 17% of its value while Oracle lost 14% (fortunately, these companies and others rebounded considerably by Tuesday). Whether or not investor reaction to DeepSeek was an overreaction requires a relatively complicated understanding of AI — and a crystal ball. However, one thing seems certain: Apple looks like the smartest guy in the room. Here’s why.
Last year, Apple announced that Siri would be using ChatGPT by the end of the year as part of its Apple Intelligence suite of AI, launching on the latest iPhones. Sam Altman, CEO of OpenAI, the company behind ChatGPT, gave DeepSeek a tip of the hat and wag of the finger on X yesterday, calling DeepSeek “…impressive…” followed by, “we will obviously deliver much better models…’.”
We don’t doubt Sam, but DeepSeek’s emergence as a major player certainly adds a lot of pressure. Imagine if Apple chose to enter the AI arms race in earnest and invested billions into its internal AI technology like OpenAI, Google (Alphabet), Facebook (Meta), and Microsoft. Apple would be subject to the market storm and saddled with meeting investor expectations for its AI technology. Instead, Apple stock is up just over 18% in the last 5 days.
Some investors believe Apple was late to the AI game. Whether or not that’s true doesn’t appear to matter much today. On the contrary, investors may be starting to understand Apple’s conservative approach to AI, as Wall Street Journal writer Joanna Stern highlighted.
Was this Apple’s “calculated master plan?” I don’t think we can rule it out. Apple’s current arrangement with OpenAI for ChatGPT integration with Apple Intelligence doesn’t prohibit Apple from developing its own AI tools or exploring other partnerships, and it’s already admitted it plans to do both.
Whether or not it was intentional, Apple has (so far) saved itself from what’s now a global rollercoaster AI ride. At the same time, it has preserved its ability to offer its users the best. Apple investors and users alike should celebrate the moment. To put the DeepSeek implications into context, Apple started this week $143 billion behind Nvidia for the world’s most valuable company. Apple is now ahead by almost $500 billion. That’s one heck of a swing! Buckle up, everyone!