Apple and Google are teaming up on AI. What it means for both stocks
Wall Street analysts believe the new partnership between Apple and Alphabet strengthens the investment cases for both companies. The two “Magnificent Seven” giants announced Monday that they would be entering a multiyear collaboration where Google’s Gemini AI and cloud technology would power future Apple features, including an AI-charged and personalized Siri expected later this year. Apple is expected to pay an annual fee of around $1 billion for access to Google’s Gemini large language models. Analysts affirmed their belief that this deal solidifies Alphabet’s solid AI leadership and bolsters the long-term value for both companies. In terms of Alphabet’s bull case, this deal underscores Google’s core AI advantage led by Gemini, wrote Citi analyst Ronald Josey, who currently has a buy on Alphabet. Josey reiterated Alphabet as one of his top Internet picks. His $350 price target implies an upside of 5% ahead for the stock. Bank of America analyst Justin Post also has a buy rating on the stock but hiked his price target to $370 from $335, corresponding to a potential gain of 11%. Post similarly pointed to this partnership as proof of Alphabet’s solid footing to lead the AI era. “While the deal was expected based on press reports, we see the agreement as an important endorsement for Google’s AI capabilities, reinforcing Gemini’s position as a leading LLM for mobile devices,” he wrote. “Also, the deal should also help reinforce investor confidence in the durability of Google’s search distribution and long-term monetization on Apple devices.” Analysts such as JPMorgan’s Samik Chatterjee similarly took the announcement as a confidence booster in Apple’s roadmap to launch a slate of enhanced Apple Intelligence features including an updated Siri. Chatterjee said this is a medium-term solution, as Apple is likely to continue evaluate in-house approaches for the long term, but acknowledged that there is a possibility this multi-year partnership turns into a longer term one. The analyst has an overweight rating and $305 price target assigned to the stock, implying upside of 17% from Monday’s close. Evercore ISI Amit Daryanani was another supporter of Apple’s base case. He maintained his outperform rating and $330 price target, which is approximately 27% above Monday’s close. “We believe the Apple-Google partnership, which was widely reported before, allows Apple to get the best of both worlds — as Apple upgrades its current model stack with the well-received Gemini 3 model while also opening new vectors for potential monetization,” he wrote.
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