Apple, Meta Jump as AI Model Advances; Nvidia, Broadcom Lead Tech Selloff
Headline: Apple, Meta Surge Amid Tech Sell-off on Advance in Cost-Effective AI Model
Introduction:
Apple (AAPL) and Meta Platforms (META) outperformed the tech sector on Monday, buoyed by the release of Chinese firm DeepSeek's groundbreaking AI model. The development provided solace to tech investors amidst a broader sell-off in AI-related stocks.
Apple's Positive Response:
DA Davidson analyst Gil Luria attributed Apple's positive reaction to the news to the potential for smaller, more efficient AI models to enhance the company's iPhone products.
Meta's AI Investments:
Meta CEO Mark Zuckerberg announced a substantial $65 billion investment in AI this year, including the development of the company's own AI model, Llama. DeepSeek's breakthrough suggests potential gains in efficiency for future large language models (LLMs).
Impact on AI Chipmakers:
Companies such as Nvidia (NVDA), which produce AI chips that power these models, faced significant losses on Monday. DeepSeek's competitive AI model, now top-ranked in Apple's app store, highlights the potential disruption to existing chipmakers.
Andreessen's Praise:
Venture capitalist Marc Andreessen hailed DeepSeek's R1 model as one of the most remarkable breakthroughs he had witnessed.
ChatGPT on iPhone:
Apple also integrates ChatGPT into its latest iPhone models, with reported training costs significantly lower than OpenAI's GPT-4. This raises concerns about hyperscalers' excessive investment in AI infrastructure.
Overall Market Trends:
The tech-heavy Nasdaq dropped by 2.6%, with chip stocks led by Nvidia and Broadcom experiencing declines. Hyperscalers such as Microsoft (MSFT), Google (GOOG), and Amazon (AMZN) also faced setbacks.
Apple's Challenges and Earnings:
Despite Monday's gains, Apple's shares remain 12% below last month's levels due to slow adoption of AI smartphones and PCs. The company is scheduled to report earnings after the market close on January 30th.