Apple has signed a multi-year deal with Alphabet for its next-gen AI models, powered by Google’s technology. This collaboration aims to enhance Apple Intelligence features, such as Siri, by leveraging Google models. This move could potentially boost Apple’s stock performance in 2026.

Apple has been struggling with AI execution issues, falling behind competitors like Alphabet and Microsoft. The focus on on-device processing and privacy has hindered Apple’s AI progress. The collaboration with Alphabet is expected to address these challenges and drive growth for Apple Intelligence, benefiting the company’s Services business.

Alphabet, Microsoft, and Amazon are actively advancing AI initiatives to improve user experience and ad performance. Apple’s partnership with Alphabet is projected to enhance the adoption of Apple models among app developers, ultimately benefiting Apple’s Services segment and driving demand for apps.

Apple’s Services business, including AppleCare and Apple TV+, is thriving on an expanding user base. The company’s strategy of adding new games and content regularly is driving growth. With over $550 billion earned by developers on Apple’s platform since 2008, the Services segment is a key revenue driver.

Apple stock has underperformed the sector, with shares appreciating 11.3% in the past year. The company faces challenges in the AI domain and stiff competition in China. With a Zacks Value Score of F, Apple’s stock is considered overvalued compared to the sector and Amazon.

Analysts expect Apple’s first-quarter fiscal 2026 earnings and revenues to grow by 10.42% and 10.54%, respectively. Despite a positive outlook for Apple’s Services business, concerns about valuation and competition remain. The stock currently has a Zacks Rank #3 (Hold), suggesting caution for potential investors.

Read more at Nasdaq: Will the Collaboration With Google Push Up Apple Stock in 2026?