There are times when a weakness can suddenly become a source of strength. Case in point: Apple stock over the past month.

The rapid advances in artificial intelligence, and high hopes for its future applications have been a big driver of the Magnificent Seven big tech stocks' outperformance in recent years. However Apple had long been considered a laggard in this regard.

Its generative AI efforts were largely considered lackluster and were part of the reason it lost market share to rivals in China. In fact, Apple "only" gained 30% in 2024: Among the M7 stocks, that put it behind Nvidia, Meta Platforms, Tesla, Amazon.com, and Alphabet, with only Microsoft turning in a worse performance. In short, its AI strategy was as close to an Achilles' heel as possible for a multi-trillion-dollar market-cap company to have.

Enter DeepSeek.

On Jan. 27, the Chinese chatbot DeepSeek threw the market into a panic. A paper suggested that it used far fewer chips, and thus cost less to produce, than other AI models. Although the figures have been disputed, the news nonetheless led investors to worry about the assumption that has buoyed American big-tech-stock valuations. If AI can be produced cheaply, companies won't have to spend as much on the technology as projected, and Silicon Valley firms might not be as advanced as previously thought.

Management teams moved quickly to calm nerves about their AI spending and abilities, though that worked better for some than others. However Apple's relatively undersized reliance on AI meant that it wasn't hit as hard.

In fact, since the DeepSeek upheaval, "Apple has become the safe haven for the Magnificent Seven," writes Ben Reitzes, Melius Research head of technology research.

Apple shares are hovering just around the breakeven point over the past month, while the Roundhill Magnificent Seven exchange-traded fund is off 9%.

Apple's relative strength is due to a couple of reasons. First and foremost: Cost. Although there are many legitimate rebuttals to the idea that DeepSeek only had a $5 million price tag, it is clear that costs are coming down sharply for many AI models. That, in turn, means Apple's relatively modest spending on AI R&D is an advantage.

"Apple never took the capex plunge and its Services margin should benefit greatly from lower costs of running AI in the cloud," Reitzes notes.

Likewise, if AI gets cheaper, people and companies will be more amenable to using the technology -- and as with so many other applications in recent years, that could transition users to phones, and away from tablets and desktops. That will spur demand for more powerful iPhones, which naturally will have higher average selling prices.

Still, Apple isn't immune to what's happening beyond tech, and Reitzes is surprised that the stock has held up well even in the face of ongoing geopolitical tensions and uncertainty surrounding tariffs.

"[Chief Executive] Tim Cook's statesmanship, combined with a compelling announcement has appeased investor concerns for now," he writes, while also highlighting that Apple's pricing power means it can somewhat offset tariff pressures. It also "boasts the best free cash flow in the world that can be used for buybacks if needed. Perhaps the market has this right -- for the 'right now,'" he concludes.

Apple's strong cash position means that it can easily cover capex plans, including an announcement earlier this week that the company will spend more than $500 billion in the U.S. over the next four years that might help appease the powers that be in Washington.

Bank of America analyst Wamsi Mohan notes that the company made similar announcements during the first Trump administration and President Biden's term. He believes the $500 billion "likely includes spending on R&D, data centers, a new manufacturing facility in Houston, supporting the supply chain, training, and original content (movies and shows for Apple TV+ service). Investment in most of these categories was likely already on the road map for spending, however Apple might have shifted part of the spending to the U.S."

The AI playing field has shifted plenty of times in the past, but for now, Apple appears to be in a sweet spot after spending time in the doghouse.