The news of DeepSeek’s launch last week spread rapidly in the markets, wiping out 16% of Nvidia‘s value while affecting many other artificial intelligence (AI) stocks.

However, several stocks notably withstood the DeepSeek avalanche, including Apple (AAPL -2.40%). Not only that, but it also ended the week with a well-received earnings report, and the world’s most valuable company is sitting at an excellent vantage point to benefit from progress in AI.

As a large and complex company, there are always many moving parts in Apple’s business. The good outweighed the bad in the earnings report, at least from the market’s perspective. Here’s why the company is standing strong in an AI meltdown, and how it’s poised to benefit from DeepSeek’s new and low-cost AI.

Succeeding where it counts

There were two sore points in Apple’s 2025 fiscal first quarter (ended Dec. 28). Sales of iPhones fell 1% from the previous year and came in below analyst expectations, and revenue in China dropped 11% year over year. Management said that phone sales were lower because of production issues in China.

Image source: Getty Images.

But that didn’t overshadow all of the positives in the quarter. Total revenue was up 4% year over year to $124.3 billion, and earnings per share (EPS) were up 10% to $2.40. Consensus estimates were $124.1 billion for revenue and $2.35 in EPS, and Apple easily surpassed those.

It’s getting some of its best results in its services business, which comprises app-store purchases and subscriptions. Revenue increased 14% year over year to $26.3 billion, beating expectations of $26.1 billion. Services are also higher margin, and total gross margin was 46.9% in the first quarter, up a full percentage point from 45.9% last year.

On top of that, the market is enthusiastic about Apple’s opportunities in AI.

Standing out in AI

The company offers a suite of AI services that are embedded within its ecosystem. Apple Intelligence has already rolled out in certain regions, and although total iPhone revenue slipped, it was elevated in those regions, including the U.S., where Apple Intelligence is already available on the iPhone. CEO Tim Cook said that the business reached “all-time iPhone revenue records in dozens of markets and regions.”

Some of the upgraded services Apple Intelligence offers are writing tools, text-prompted images and videos, and image cleanup. That may not sound like anything different from other AI systems at first glance, but it enhances the company’s ecosystem, which is a holistic technology approach and perhaps the most compelling reason it is so successful.

The company is all about the user experience, and its differentiated technology is only available on its devices. Users typically stick to Apple products, so bringing on new buyers can result in a high lifetime value per customer. Those who don’t have one of the company’s products may have access to similar AI functions on different apps, but that’s just what they are: different apps. Apple’s AI functions are integrated into its devices, upgrading the full experience.

The best is yet to come

There are several reasons to be bullish about Apple and its AI systems. Although it’s been slower to launch than some rivals, it’s also spending less, which is why the DeepSeek launch isn’t a threat; management is aiming for a similar approach to cost-effective AI spending.

Even more, if the technology becomes more prevalent for a cheaper price, experts expect that a lot of AI generation is going to happen through Apple products. The company’s fans are going to engage with AI through the Apple ecosystem, and as the business invests in Apple Intelligence on the iPhone, they’re going to engage specifically on their mobile phones.

Some experts speculate that there were fewer iPhone upgrades over the holidays because the devices have become much better, negating the need to upgrade very quickly. While that could hurt sales in the short term, offering a better product is ultimately what keeps customers in the company’s ecosystem long term.

As it launches new features in Apple Intelligence and rolls it out across more regions, it boosts the stock’s investing thesis for long-term investors.