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Chinese AI startup DeepSeek seen as positive for Apple

MacDailyNews

Jan 30

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Apple’s fiscal first-quarter earnings have been spiked with some last-minute optimism that the company might gain from the same disruptive forces that have recently shaken the tech industry. The advent of the Chinese AI startup DeepSeek is viewed positively for Apple, as the availability of more affordable AI models could finally trigger the long-awaited iPhone upgrade cycle and spur renewed growth. The market will closely watch how AI and iPhone sales perform when Apple reports its results after the market closes.

Ryan Vlastelica for Bloomberg News:
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DeepSeek’s AI showed strong results despite dramatically lower costs and fewer performance chips than other models. While this triggered a historic selloff in AI chipmaker Nvidia Corp., it’s seen as a potential boon to software companies and app makers. A proliferation of AI apps and services could be what makes consumers finally trade up for phones with AI capabilities.
“It seems like the cost of AI has just come down, which means we could be about to hit an S-curve of app innovation and AI adoption, and if that happens, the bull case for Apple writes itself,” said Andrew Choi, portfolio manager at Parnassus Investments. “The impact won’t be immediate, and we still need to see people upgrade, but the AI outlook is better than it was a week ago, when it seemed clear people weren’t trading up for Apple Intelligence.”
[M]any still consider Apple a haven stock, and it screens well on quality characteristics like the durability of its earnings, large recurring revenue from its massive user base, and the billions of dollars it spends on buybacks.

MacDailyNews Take: The cheaper and more efficient AI becomes, the better it is for Apple.
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MacDailyNews Note: Apple is scheduled to announce its fiscal first-quarter (holiday 2024) results after the market closes on Thursday. As always, we’ll have the results for you on our home page as soon as they are released, right around 1:30pm PT / 4:30pm ET on Thursday, January 30th.

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