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Apple, Meta Platforms rise to lead 'Magnificent 7' stocks amid AI washout
Apple ( AAPL ) and Meta Platforms ( META ) stocks both jumped Monday, bucking the trend of their Magnificent Seven peers and providing some respite for tech investors amid a steep sell-off in AI and related names following the release of Chinese firm DeepSeek's new cost-effective AI model .
Apple rose more than 3% Monday, with the iPhone maker regaining its spot as the world's most valuable company. Meta shares climbed nearly 2%.
In an email on Monday, DA Davidson analyst Gil Luria told Yahoo Finance, "Apple is reacting positively to the DeepSeek news because smaller more efficient models means it will be able to have better AI products in the iPhone."
Meta CEO Mark Zuckerberg on Friday said the company would spend as much as $65 billion this year on AI investments. The company has been working on building its own AI model, Llama, and DeepSeek's breakthrough shows possible efficiency gains available to future LLMs.
Companies being hit hardest on Monday, most notably Nvidia, make AI chips that power these models.
Last week, DeepSeek released an AI model competitive with OpenAI’s, putting it at the top of Apple’s app store .
Venture capitalist Marc Andreessen wrote in a post on X Jan. 24 that DeepSeek's latest R1 model is "one of the most amazing and impressive breakthroughs I’ve ever seen." Apple also offers ChatGPT on its latest iPhone.
The reported cost to train one of its latest models was just $5.6 million, far below OpenAI’s more than $100 million in spending to train GPT-4 — prompting concern among the investment community that hyperscalers are severely overinvesting in AI infrastructure.
Nvidia ( NVDA ) and Broadcom ( AVGO ) led chip stocks down, while the tech-heavy Nasdaq dropped 3%. Hyperscalers Microsoft ( MSFT ) and Google ( GOOG ) also fell.
Even with Apple stock’s rise Monday, shares are still down 11% from last month as AI smartphones and PCs struggle to gain traction.
The stock was hit with two downgrades last week from Jefferies and Loop Capital amid its struggling iPhone sales. Apple is set to report earnings after the bell Jan. 30. The majority of analysts tracked by Yahoo Finance recommend buying the stock and see shares rising to $246 over the next 12 months.