While shock at yesterday’s DeepSeek news saw the stock prices of many tech giants fall, AAPL climbed 3.25% across the course of the day.
Experts yesterday expressed amazement at the Chinese company’s AI model being on a par with US chatbots like ChatGPT, Gemini, and Llama despite being developed for a fraction of the cost and running on far lower-spec hardware …
DeepSeek’s achievement ‘cannot be over-stated’
DeepSeek is an AI chatbot developed in China, and which posted benchmarks indicating that its performance was comparable to the world’s best existing models. Experts quickly verified the claims, expressing shock that China was able to achieve this at a fraction of the development cost of US models, and running locally on very modestly-specced PCs.
Many said that the scale of this achievement cannot be over-stated.
The app quickly climbed to the #1 slot in Apple’s App Store.
Sent US tech stocks tumbling
The biggest shock was how China was able to develop such a powerful AI model while US export controls limited the number of Nvidia GPUs it was able to purchase. We noted yesterday that chatbots from OpenAI, Google, and Anthropic use more than half a million of these, while DeepSeek was only able to obtain around 50,000 GPUs – meaning it’s delivering comparable results with only 10% of the processing power.
It was previously thought that there was a direct correlation between the number of Nvidia processors and AI performance, so evidence to the contrary saw Nvidia shares slump.
The results sent a shockwave through markets on Monday, with Nvidia on course to lose more than $300bn of market value, the biggest recorded drop for any company, as investors reassessed the likely future investment in AI hardware.
The share value of other US AI players like Microsoft and Meta similarly fell.
But AAPL climbed 3.25%
There was, however, an exception to the trend: AAPL stock climbed 3.25% in the course of the day.
Daring Fireball’s John Gruber suggested that a key reason might be that it validates Apple’s approach of aiming to run as much AI stuff as it can on-device. Its own AI servers are the next recourse, with ChatGPT as fallback.
There has been skepticism about just how many Apple Intelligence features can be powered by the company’s own device chips, rather than having powerful servers do the lifting, but DeepSeek runs on rather ordinary PCs – suggesting that Apple’s approach could be far more successful than anyone has so far imagined.
A vast increase in the inference capabilities of RAM-constrained hardware strongly suggests that Apple’s consumer devices will soon be able to perform far more AI functionality locally.
Whether or not he’s correct about the impact on the share price, there’s no arguing that Apple’s case for on-device processing just got way more credible.
Photo by John Cameron on Unsplash
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