Here’s a bold statement: Apple’s recent partnership with Google’s Gemini might just be the game-changer AI-skeptic 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 robust mobile ecosystem. With a competitive—if not industry-leading—AI feature suite, Apple’s wide economic moat (our rating: Wide) could become even harder to breach. Here’s why this matters: Apple’s strength lies in creating user-friendly software, not in developing cutting-edge AI models from scratch. By partnering with Gemini, Apple can focus on what it does best—crafting compelling features—while leveraging a powerful AI backbone.
Here’s the kicker: Apple’s commitment to privacy and security remains intact. Instead of relying on external servers, Apple will run Gemini instances on its own servers via its Private Cloud Compute offering. Users will even have the option to share prompts directly with Gemini—a win for transparency and control.
Our take? This partnership reinforces Apple’s existing growth trajectory rather than sparking a new one. We’re sticking to our $240 fair value estimate (Morningstar Rating: ★★), as this announcement aligns with our long-term thesis. The market seems to agree—Apple’s stock barely budged post-announcement, suggesting the partnership was already priced in.
But here’s the controversial question: Could Gemini trigger a hardware refresh cycle for the iPhone? Bulls argue that if larger AI models require more memory, consumers might rush to buy the latest phones to access new features. Skeptics, however, doubt this will be enough to drive a higher valuation. What do you think? Will this partnership revolutionize Apple’s AI game, or is it just another step in the evolution?
For now, one thing’s clear: Apple’s AI future looks brighter—and more secure—than ever. Want more insights like this? Subscribe to Morningstar’s newsletter here.
