Alphabet Shares Climb on Apple AI Partnership Reports
A potential deal to integrate Google's Gemini AI into Apple's iPhone could reshape the AI landscape and create a major new revenue stream for the search giant.
Shares of Alphabet Inc. (GOOGL) jumped more than 2.5% in recent trading following reports that the company is in active negotiations with Apple to license its Gemini artificial intelligence models for integration into the iPhone.
The potential partnership, which could be announced later this year, would be a landmark deal in the technology sector. It would place Google’s generative AI at the core of its biggest rival's ecosystem, providing an answer to Apple's urgent need for advanced AI features while handing Google a decisive victory in the AI platform wars.
Alphabet's stock rose to $330.24, an increase of over 2.5%, as investors reacted to the strategic implications of the news. The deal would represent one of the most significant collaborations between the two tech titans, whose existing multi-billion dollar agreement making Google the default search engine on Apple's Safari browser is already under intense regulatory scrutiny.
According to a Forbes report citing sources familiar with the discussions, the talks are focused on licensing Gemini to power a host of new generative AI capabilities expected in Apple’s upcoming iOS 18 software update. While Apple is developing its own smaller, on-device AI models, it has been seeking a partner to handle more complex, cloud-based generative AI tasks, such as image creation and advanced text summarization.
A partnership would be a major strategic pivot for Apple, which has historically prided itself on developing its core technologies in-house. However, the rapid advancement of generative AI, led by players like OpenAI—backed by Microsoft—and Google, has put pressure on the iPhone maker to deliver competitive features quickly. This has led Apple to explore outside partnerships to close the gap.
For Google, embedding Gemini into hundreds of millions of iPhones would be a massive coup. It would not only create a significant new revenue stream, likely structured as a revenue-sharing agreement, but also provide a powerful distribution channel that would solidify Gemini's position as a dominant AI platform. The move would be a considerable blow to rivals, particularly OpenAI, which was also believed to be in contention for the Apple partnership.
Analysts see the potential deal as a logical, if complex, step for both companies. With a strong buy consensus from over 50 analysts, Wall Street has long been bullish on Alphabet's AI prospects. This partnership would offer the clearest path to monetizing its significant investment in AI research and development beyond its traditional advertising business.
However, any such agreement is certain to draw immediate and intense scrutiny from regulators in Washington and Brussels. Antitrust authorities are already investigating the existing search default deal between the two companies, and a deeper partnership in the critical field of artificial intelligence would raise significant competition concerns. This regulatory hurdle remains the largest unknown factor and a considerable risk for both parties.
As the tech world awaits an official announcement, which could come around Apple's annual Worldwide Developers Conference (WWDC), the negotiations underscore the shifting alliances and high-stakes maneuvering that define the current AI arms race. The outcome will have lasting implications not just for Google and Apple, but for the entire competitive landscape of artificial intelligence.