Should Apple's (AAPL) Talks With Google on Gemini AI Shift Its Approach to In-House Innovation?

• Recent news revealed that Apple is in early discussions with Alphabet to potentially incorporate Google's Gemini AI model into a new version of Siri, marking a significant potential shift from its traditional focus on in-house development and privacy controls.
• This possible move highlights Apple's response to intensifying competitive pressure in the generative AI space and signals a willingness to adapt its technology roadmap to maintain its position in the broader AI-powered device landscape.
• Next, we'll assess how Apple's willingness to consider external AI partnerships could reshape its long-term investment narrative and growth outlook.

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Apple Investment Narrative Recap

To own Apple stock, investors need to believe in Apple’s ability to grow its Services ecosystem and launch meaningful device innovations, even as hardware upgrade cycles slow. The news that Apple is considering an external AI partnership signals a drive to close the generative AI gap, but in the near term, the most important catalyst, whether Apple can deliver materially improved AI features in its devices, remains largely unchanged. The biggest risk continues to be pressure on Services margins from regulatory, legal, and partner agreement challenges, none of which are acutely impacted by this development.

The United Airlines partnership to stream entire seasons of Apple TV+ hits, fresh off a record 81 Emmy nominations, stands out for the Services narrative. This move underscores Apple’s ambition for Services growth and enhancing brand loyalty, though translating increased content visibility into sustained margin gains is still subject to ongoing App Store scrutiny and competitive dynamics.

By contrast, investors should be aware that regulatory risks tied to Services revenue and App Store arrangements could...

Read the full narrative on Apple (it's free!)

Apple's outlook projects $482.7 billion in revenue and $134.5 billion in earnings by 2028. This is based on a 5.7% annual revenue growth rate and a $35.2 billion increase in earnings from the current level of $99.3 billion.

Uncover how Apple's forecasts yield a $234.28 fair value, a 3% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members offered 143 fair value estimates for Apple, spanning US$170 to US$309 per share. With regulatory scrutiny still a leading risk, these diverse analyses show just how widely your view on Apple’s future can vary compared to your peers.

Explore 143 other fair value estimates on Apple - why the stock might be worth 25% less than the current price!

Build Your Own Apple Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Apple research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Apple research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Apple's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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