Tech giant Apple (NASDAQ:AAPL) plans to partner with Alphabet’s (NASDAQ:GOOGL) Google to boost its AI offerings. According to a Bloomberg report, Apple is in advance talks with Google to license the latter’s Gemini AI model to power some of the iPhone’s features.
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The terms of the agreement between the two parties remain undecided. The deal, if any, is expected to be announced in June, coinciding with Apple’s annual Worldwide Developers Conference. In addition to discussions with Google, Apple explored the possibility of using the model developed by OpenAI, as the report highlighted.
The iPhone maker is under criticism for lagging behind its peers in Artificial Intelligence (AI) advancements. Further, the decline in capital expenditure raised concerns about its investments in generative AI. Nonetheless, the company’s CFO, Luca Maestri, reassured shareholders during the Q1 2024 conference call that it remains committed to investing across all areas of its business at appropriate levels.
Apple’s AI Initiatives
Apple has remained tight-lipped about its AI initiatives. However, Apple’s CEO, Tim Cook, disclosed during the Q1 conference call that the company is allocating significant time and resources to AI endeavors. Cook expressed optimism about the potential growth opportunities associated with Gen AI for Apple.
Recently, Apple acquired the Canadian AI startup DarwinAI. The move will likely bolster its AI capabilities and align with its ongoing efforts to advance in AI.
Is Apple a Buy, Hold, or Sell?
Apple stock is under pressure, declining over 10% year-to-date. Concerns over iPhone demand, intensifying competition in China, and weakness in the Wearables, Home, and Accessories segment keep analysts cautiously optimistic.
Apple stock sports a Moderate Buy consensus rating based on 16 Buys, nine Holds, and one Sell recommendation. Analysts’ average price target on AAPL stock stands at $204.86, which implies 18.68% upside potential from current levels.
