Here’s a bold statement: Apple’s recent partnership with Google’s Gemini might just be the game-changer AI-anxious investors have been waiting for. But here’s where it gets controversial—while some see this as a strategic move, others argue it’s a sign Apple is playing catch-up in the AI race. Let’s dive in.
On January 12, Google revealed a multiyear partnership where Apple’s next-generation AI models will be built on Gemini’s foundation. This isn’t just a minor update—Gemini will power the upcoming Siri voice assistant, set to launch in 2026, and become a cornerstone of Apple Intelligence. And this is the part most people miss: This partnership could finally give Apple the AI edge it’s been promising but struggling to deliver.
At Morningstar, we believe this move will solidify Apple’s already strong mobile device ecosystem. With Gemini, Apple isn’t just playing in the AI sandbox—it’s positioning itself as a serious contender. Here’s why this matters: Apple’s strength lies in creating user-friendly software, not in developing AI models from scratch. By partnering with Gemini, Apple can focus on what it does best—crafting compelling features that users love.
Here’s a thought-provoking question: Is Apple’s decision to partner rather than build its own AI models a sign of weakness or strategic brilliance? We lean toward the latter. Apple’s brand is synonymous with security and privacy, and this partnership ensures those values remain intact. Gemini will run on Apple’s own servers via its Private Cloud Compute, giving users control over their data. Plus, users can opt in to share prompts with Gemini directly—a win-win for privacy and functionality.
Now, let’s talk numbers. We’re maintaining our $240 fair value estimate for Apple, as this partnership aligns with our long-term outlook. The market’s muted reaction suggests the news was already priced in, but here’s the kicker: For Apple’s valuation to soar, Gemini would need to spark a hardware refresh cycle, encouraging consumers to upgrade their iPhones for new AI-driven features. Bulls argue this is possible if Gemini enables larger, memory-intensive models that require the latest hardware.
What do you think? Is this partnership a masterstroke that will protect Apple’s ecosystem, or is it a missed opportunity to innovate independently? Let us know in the comments. Either way, one thing’s clear: Apple’s AI game just got a whole lot more interesting. Stay tuned for more insights—subscribe to Morningstar’s newsletter to keep up with the latest developments.
