We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will the Collaboration With Google Push Up Apple Stock in 2026?
Read MoreHide Full Article
Key Takeaways
AAPL struck a multi-year deal to use GOOGL's Gemini AI models and cloud for Apple Intelligence.
The partnership aims to solve timing and execution issues slowing AAPL's AI rollout.
Apple Intelligence is expected to drive growth in AAPL's Services segment and app developer demand.
Apple (AAPL - Free Report) has inked a multi-year collaborative deal with Alphabet (GOOGL - Free Report) under which the next generation of the former’s foundation models will be based on Google's Gemini models and cloud technology. Apple Intelligence features, including a more personalized Siri, will now be powered by Google models. Apple Intelligence will continue to run on Apple devices and Private Cloud Compute. Can this be a game-changer for Apple stock in 2026? Let’s find out.
Apple AI Push to Benefit From GOOGL Deal
Apple has been facing several issues with its AI initiatives, including timing and execution. The iPhone-maker has been playing catch-up with the likes of Alphabet, Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) in the AI space. Apple Intelligence features are either being delayed or launched quite late in growth regions like Greater China. Execution challenges have been an issue as Apple’s focus on on-device processing and privacy has been a constraint for its AI models as compared with cloud-based models from Alphabet and Microsoft, which have the ability to scale faster and gain knowledge more aggressively.
Alphabet has been actively embedding AI, especially within Search, to enhance user experience, provide better AI-focused features and consequently improve ad performance. Microsoft is benefiting from strong Copilot adoption. The expanded OpenAI partnership, securing $250 billion in additional Azure commitments, reinforces long-term AI leadership for Microsoft. Amazon’s AI initiatives, like Trainium 2, show promise. AWS provides cutting-edge AI and machine learning services to enterprise customers, positioning Amazon as a leader in the rapidly expanding generative AI market.
Apple’s collaboration with Alphabet is expected to solve some of its timeliness and execution issues. Apple Intelligence is expected to play a significant role in driving the company’s Services business, which accounted for roughly 26% of net sales. Apple has witnessed strong shipments of its devices in markets where Apple Intelligence has been available. The company believes growing adoption of Apple Intelligence among developers will drive strong demand for their apps. The addition of Google models, including Gemini, is expected further boost the adoption of Apple models among app developers.
Apple’s Prospects to Ride on Strong Services Business
Services, which comprises Apple’s advertising business, AppleCare, Cloud Services, Digital content (Arcade, Music, Fitness+, TV, News+) and Payment services (Apple Card & Apple Pay), is riding on an expanding base of installed devices. Apple’s Services segment benefits from an expanding games portfolio and the growing popularity of Apple TV+. Apple’s strategy of adding new games on a continuous basis is driving its user base. Apple TV+ is benefiting from an expanding content portfolio, with total hours viewed increased 36% year over year in 2025.
The Services have been benefiting from frequent updates, thereby driving the user base. In 2025, the App Store saw more than 850 million average weekly users globally, with developers earning over $550 billion on Apple’s platform since 2008. New features helped Apple Pay make a significant impact by eliminating well over $1 billion in fraud, while generating more than $100 billion in incremental merchant sales globally. Apple Pay is now available in 89 markets, while Apple Fitness+ expanded to 28 additional countries and regions. Apple Arcade expanded its catalog of highly rated games with more than 50 new titles.
Apple Underperforms Sector, Shares Overvalued
Apple shares have appreciated 11.3% over the trailing 12-month period, underperforming the Zacks Computer and Technology sector’s return of 29.9%. The company has suffered from headwinds related to Apple Intelligence, stiff competition in China and uncertainty over tariffs. Apple underperformed Alphabet, Microsoft and Amazon with shares jumping 75.1%, 14.8% and 13.1%, respectively.
Apple Stock’s Performance
Image Source: Zacks Investment Research
Apple’s stock is pricey, as the Value Score of F suggests a stretched valuation at this moment.
AAPL is trading at a forward 12-month price/sales (P/S) of 8.27X compared with the sector’s 7.47X, and Amazon’s 3.3X.
The Zacks Consensus Estimate for Apple’s first-quarter fiscal 2026 earnings has increased by three cents to $2.65 per share over the past 60 days, indicating 10.42% growth from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for Apple’s first-quarter fiscal 2026 revenues is pegged at $137.40 billion, indicating 10.54% growth over the figure reported in the year-ago quarter.
Conclusion
Apple’s prospects are expected to benefit from its strong Services business. However, a stretched valuation and stiff competition in the AI domain are a concern for prospective investors.
Image: Bigstock
Will the Collaboration With Google Push Up Apple Stock in 2026?
Key Takeaways
Apple (AAPL - Free Report) has inked a multi-year collaborative deal with Alphabet (GOOGL - Free Report) under which the next generation of the former’s foundation models will be based on Google's Gemini models and cloud technology. Apple Intelligence features, including a more personalized Siri, will now be powered by Google models. Apple Intelligence will continue to run on Apple devices and Private Cloud Compute. Can this be a game-changer for Apple stock in 2026? Let’s find out.
Apple AI Push to Benefit From GOOGL Deal
Apple has been facing several issues with its AI initiatives, including timing and execution. The iPhone-maker has been playing catch-up with the likes of Alphabet, Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) in the AI space. Apple Intelligence features are either being delayed or launched quite late in growth regions like Greater China. Execution challenges have been an issue as Apple’s focus on on-device processing and privacy has been a constraint for its AI models as compared with cloud-based models from Alphabet and Microsoft, which have the ability to scale faster and gain knowledge more aggressively.
Alphabet has been actively embedding AI, especially within Search, to enhance user experience, provide better AI-focused features and consequently improve ad performance. Microsoft is benefiting from strong Copilot adoption. The expanded OpenAI partnership, securing $250 billion in additional Azure commitments, reinforces long-term AI leadership for Microsoft. Amazon’s AI initiatives, like Trainium 2, show promise. AWS provides cutting-edge AI and machine learning services to enterprise customers, positioning Amazon as a leader in the rapidly expanding generative AI market.
Apple’s collaboration with Alphabet is expected to solve some of its timeliness and execution issues. Apple Intelligence is expected to play a significant role in driving the company’s Services business, which accounted for roughly 26% of net sales. Apple has witnessed strong shipments of its devices in markets where Apple Intelligence has been available. The company believes growing adoption of Apple Intelligence among developers will drive strong demand for their apps. The addition of Google models, including Gemini, is expected further boost the adoption of Apple models among app developers.
Apple’s Prospects to Ride on Strong Services Business
Services, which comprises Apple’s advertising business, AppleCare, Cloud Services, Digital content (Arcade, Music, Fitness+, TV, News+) and Payment services (Apple Card & Apple Pay), is riding on an expanding base of installed devices. Apple’s Services segment benefits from an expanding games portfolio and the growing popularity of Apple TV+. Apple’s strategy of adding new games on a continuous basis is driving its user base. Apple TV+ is benefiting from an expanding content portfolio, with total hours viewed increased 36% year over year in 2025.
The Services have been benefiting from frequent updates, thereby driving the user base. In 2025, the App Store saw more than 850 million average weekly users globally, with developers earning over $550 billion on Apple’s platform since 2008. New features helped Apple Pay make a significant impact by eliminating well over $1 billion in fraud, while generating more than $100 billion in incremental merchant sales globally. Apple Pay is now available in 89 markets, while Apple Fitness+ expanded to 28 additional countries and regions. Apple Arcade expanded its catalog of highly rated games with more than 50 new titles.
Apple Underperforms Sector, Shares Overvalued
Apple shares have appreciated 11.3% over the trailing 12-month period, underperforming the Zacks Computer and Technology sector’s return of 29.9%. The company has suffered from headwinds related to Apple Intelligence, stiff competition in China and uncertainty over tariffs. Apple underperformed Alphabet, Microsoft and Amazon with shares jumping 75.1%, 14.8% and 13.1%, respectively.
Apple Stock’s Performance
Image Source: Zacks Investment Research
Apple’s stock is pricey, as the Value Score of F suggests a stretched valuation at this moment.
AAPL is trading at a forward 12-month price/sales (P/S) of 8.27X compared with the sector’s 7.47X, and Amazon’s 3.3X.
Apple Stock’s Valuation
Image Source: Zacks Investment Research
Apple’s Fiscal Q1 Estimate Revision Shows Positive Trend
The Zacks Consensus Estimate for Apple’s first-quarter fiscal 2026 earnings has increased by three cents to $2.65 per share over the past 60 days, indicating 10.42% growth from the figure reported in the year-ago quarter.
Apple Inc. Price and Consensus
Apple Inc. price-consensus-chart | Apple Inc. Quote
The Zacks Consensus Estimate for Apple’s first-quarter fiscal 2026 revenues is pegged at $137.40 billion, indicating 10.54% growth over the figure reported in the year-ago quarter.
Conclusion
Apple’s prospects are expected to benefit from its strong Services business. However, a stretched valuation and stiff competition in the AI domain are a concern for prospective investors.
AAPL currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.