DeepSeek is presently the most well-liked free app within the UK on the Apple (NASDAQ: AAPL) app retailer. So I believed I’d be part of the gang and take the Chinese language chatbot for a check drive. After first being instructed I couldn’t register — it turned out it had been hit by a cyberattack — I used to be lastly in a position to open an account. So I requested it for its high three S&P 500 progress shares to think about shopping for.

Right here’s what the synthetic intelligence (AI) bot stated…

The highest decide

The primary inventory it churned out was Apple. It highlighted the agency’s sturdy steadiness sheet and huge ecosystem of services and products.

I wouldn’t disagree with that. The iPhone maker had money and liquid property of $65.2bn on the finish of September, and has over 2.2bn energetic units worldwide. Nevertheless, I might problem DeepSeek’s assertion that income progress is “strong” and it has proven “constant innovation“.

Apple’s income dipped 2.8% in 2023 and grew simply 2% in its most up-to-date monetary yr. In the meantime, it has fallen behind rivals in China and has reportedly stopped manufacturing of Apple Imaginative and prescient Professional headsets quickly resulting from lack of demand. It additionally spent a decade engaged on an electrical automobile that it by no means delivered to market, earlier than cancelling the undertaking final yr.

Having already constructed out its large consumer base, Apple is targeted extra on incremental enhancements. This isn’t to criticise the corporate, simply to query a few of DeepSeek’s factors.

With the inventory’s price-to-earnings (P/E) ratio at a excessive 34, Apple wouldn’t be my high S&P 500 selection.

The opposite two

The bot’s second decide was Microsoft. Hmm…I’m detecting a sample right here. That’s as a result of Apple simply reclaimed the tile of the world’s most beneficial firm, with Microsoft at quantity two. In third place is AI chipmaker Nvidia, after its share price slumped practically 17% yesterday (27 January).

However absolutely DeepSeek didn’t give me Nvidia as its third decide? Laughably, it did, spitting out the S&P 500’s high three in practically the very same pecking order as of its coaching deadline (July 2024).

Sarcastically, in fact, it was DeepSeek that was liable for Nvidia’s epic one-day drop yesterday. Buyers have been spooked by its purportedly dirt-cheap improvement price in comparison with Western rivals like ChatGPT.

I additionally requested the AI assistant whether or not it was a menace to Nvidia’s share price. Apparently, it ended with, “I’m not a direct hazard, however I’m a part of a broader development that Nvidia might want to navigate because the AI panorama evolves“.

Last ideas

I requested ChatGPT Plus for 3 S&P 500 shares originally of the yr and it additionally gave me Microsoft and Nvidia. However it broke with index orthodoxy and went with Visa as its third decide.

Is DeepSeek any good? Not for choosing shares, although I solely used the free model. My hunch is the US will ban it on safety grounds.

Extra broadly, it’s turning into clear that generative AI fashions are commodities. This implies margins will most likely be low, in contrast to the standard Silicon Valley software program mannequin.

That’s to not say AI typically received’t revolutionise industries. I reckon it will definitely will, like electrical energy has.

However the important thing for buyers is to determine whether or not an AI-based firm really has a sturdy aggressive benefit (or not).