On Thursday, Apple Inc. AAPL CEO Tim Cook lauded DeepSeek, a China-based AI startup.
What Happened: During Apple’s first-quarter earnings call, Cook was asked about the perception that Cupertino is benefiting from lower compute costs.
The analyst inquired about Cook’s perspective on the DeepSeek situation and whether any changes in the cost landscape could impact Apple’s margins.
In response, the Apple CEO detailed the company’s use of a hybrid AI model, where simple tasks are executed locally on devices, while complex operations are managed in the cloud through AI partnerships.
Currently, Apple collaborates with OpenAI, leveraging ChatGPT to assist iPhone users via a private cloud.
“From a CapEx point of view, we’ve always taken a very prudent and deliberate approach to our expenditure and we continue to leverage a hybrid model, which I think continues to serve us well,” Cook stated.
Despite OpenAI’s accusation of DeepSeek using its models without permission, Cook acknowledged DeepSeek’s contributions.
“In general, I think innovation that drives efficiency is a good thing. And, you know, that’s what you see in that model,” he said on the earnings call.
Why It Matters: Apple has previously indicated that it is open to incorporating AI models from other companies, like Google’s Gemini or Anthropic’s Claude, into future iPhones.
DeepSeek claims to have developed its cost-efficient R1 model in just two months with an investment of $5.6 million. While these claims have been scrutinized they have also raised questions about the need for large-scale GPU investments.
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On Wednesday, Meta CEO Mark Zuckerberg also acknowledged DeepSeek’s novel approaches. However, he said it’s too soon to determine how these developments will impact infrastructure usage and capital expenditures.
Microsoft CEO Satya Nadella also recognized DeepSeek’s AI innovations but remained cautious about their potential to reduce AI costs.
Apple’s earnings report revealed a fiscal first-quarter revenue of $124.3 billion, surpassing analyst estimates, despite a decline in iPhone sales.
Price Action: Apple’s stock rose by 3.01% in after-hours trading, hitting $244.75. In regular trading on Thursday, it closed at $237.59, reflecting a 0.74% decline, according to Benzinga Pro data.
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