Google announced a partnership with Apple to use Gemini models for next-gen AI, enhancing Siri by 2026. Apple’s AI strategy revamp should reinforce its mobile ecosystem. The firm’s choice to partner instead of building its own AI models aligns with its software strengths. Apple’s security and privacy features will remain intact with Gemini.

Maintaining a $240 fair value estimate for Apple, the market had already priced in the partnership. The announcement should protect Apple’s existing growth trajectory, rather than spur a new growth cycle. For a higher valuation, Gemini would need to drive a hardware refresh cycle for the iPhone.

Bulls believe the Gemini partnership could lead to new, memory-intensive models for Apple, prompting consumers to buy new iPhones for AI-generated features. This potential upcycle could drive stronger growth for Apple in the future.

Read more at Morningstar: Apple: Gemini Partnership Lets AI-Worried Investors Breathe a Sigh of Relief