The Apple-Google AI deal is a massive win for investors in both tech giants
A core pillar of our investment case in Google-owner Alphabet materialized Monday. Fellow Club name Apple selected Google’s AI model, Gemini, to power the artificial intelligence features across Siri and other key products later this year. The multi-year partnership to integrate Gemini into Apple’s foundation models, confirmed in an Apple statement obtained by Jim Cramer, represents a significant validation of Google’s AI capabilities. “Gemini is the winner,” Jim said Monday on ” Squawk on the Street ,” adding that Apple “did a fair look and decided Google is the best.” Alphabet shares advanced more than 1.5% on after the news, hitting an all-time high of $334 each. The stock briefly joined the $4 trillion market-cap club before coming off its day’s highs. Apple stock only gained 0.5% on the Gemini news. Last week, Alphabet surpassed Apple’s market cap for the first time since 2019 and remained above it on Monday. The mega-cap tech partnership shows that Google’s Gemini has stamped a dominant footprint in the AI war. It reinforces why we initiated our position in Alphabet in late December. While we stepped away earlier last year over concerns that Google was losing ground to OpenAI’s ChatGPT, the rapid evolution of Gemini, especially its latest iteration and most intelligent model in Gemini 3, has flipped the script. Alphabet’s Gemini is more than a chatbot: it is a reasoning engine built to process information in the same way a human does. This is news that Jim foreshadowed to Investing Club members in his first Sunday think piece of the year. “Gemini3 will soon cement its dominance by cutting a deal with Apple to be its sole source of AI content. That’s 1.5 billion users. What will the others, including OpenAI, have?” he wrote on Jan 4, also calling Alphabet “the best-positioned hyperscaler, with the best, most accurate site, Gemini 3, and the best business model, thanks to the ingenious way it dovetails with Google.” The enhanced partnership is also a positive for Apple as it looks to build out its AI strategy. The stock has been “a big disappointment since the year began,” Jim said, citing investor concerns about a decline in its services revenue. Indeed, Apple has been the odd company out in the mega-cap tech cohort, given it lacks a clear AI roadmap. That’s a key reason why it underperformed the broader market last year. A major fear among investors is that Apple will not deliver on AI features that should entice people to buy the latest iPhone, leading them to keep their older phones longer. But after speaking with Eddie Cue, Apple’s senior VP of services, Jim found that the company’s services segment is “incredibly strong.” Wall Street is also taking a positive view. Wedbush’s Dan Ives sees Monday’s news as “an incremental positive to both AAPL and GOOGL,” he wrote in a note to investors. Ives called it “a major validation moment for Google as a premier foundation model and for Apple as a stepping stone to accelerate its AI strategy into 2026 and beyond.” Jim reiterated his “own it, don’t trade it” stance on Apple, and we maintain our $300 price target and 2-rating on the stock. As for Alphabet, we have a $350 price target and 1-rating on the stock. (Jim Cramer’s Charitable Trust is long AAPL, GOOGL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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