Apple’s (AAPL) potential partnership with Google parent company Alphabet (GOOG, GOOGL) is part of the iPhone maker’s strategy to incorporate artificial intelligence into its flagship product, Wedbush Securities said.
The technology giants are in talks for Apple to license Google’s Gemini AI engine and power the generative AI features Apple is seeking to build into the iPhone’s software this year, Bloomberg News reported late Sunday. Apple also recently held talks with Microsoft-backed (MSFT) OpenAI over licensing its technology, Bloomberg reported, citing sources.
Apple, Alphabet, and OpenAI didn’t immediately respond to MT Newswires’ requests for comment. Alphabet’s shares advanced 5.7% in Monday trading, while Apple gained 2.6%.
The move reflects Apple’s broader AI strategy after including its own AI App Store and additional features into the iPhone 16, Wedbush said in a Monday client note. It also represents a “major win” for Google to get onto the Apple ecosystem with “clearly a major license fee attached to this,” analysts led by Daniel Ives wrote.
“Cook (and company) are not holding back and are diving into the deep end of the pool on AI both organically and through partnerships (Google) in an aggressive strategy we loudly applaud,” Ives said, referring to Apple Chief Executive Tim Cook. We would expect this to be an Apple-branded solution.”
The brokerage expects the partnership to give the iPhone maker the foundation and technology blueprint to double down on the AI features it is developing on the iPhone 16. Wedbush anticipates more details to be revealed on the company’s AI strategy at the Worldwide Developers Conference in June.
Wedbush maintained its outperform rating on Apple’s stock with a 12-month price target of $250. The investment company also has an outperform rating on Alphabet with a price target of $160.