AI joins Apple, Apple seeks Google, the market is very happy, the reasons are very sufficient?

Apple and Alphabet-C are reportedly "collaborating," which has been well received by the market. Both stocks surged, with Alphabet-C closing up 4.6% on Monday and Apple briefly jumping over 2.7% before ultimately closing up 0.6%.

A previous report indicated that Apple and Alphabet-C are actively negotiating, hoping to authorize Gemini to provide support for some new features of Apple's software this year.

If this collaboration can be realized, it can address each other's concerns and have significant implications for both parties.

AI Enters Apple, Alleviating Each Other's Concerns

Firstly, from Alphabet-C's perspective, for years Alphabet-C has been paying Apple billions of dollars to make its search engine the default search engine on Apple and other devices' Safari browsers.

Once Apple and Alphabet-C reach an agreement, it will further strengthen the long-term cooperation between the two tech giants in the search field, while Gemini will be able to enter Apple's billions of active devices, gaining more potential users and gaining a scale advantage in the AI competition.

Furthermore, Gemini's entry into Apple not only gains access to millions of potential users but also gains access to high-quality users who may be willing to pay higher fees for advanced AI services. Looking ahead, more users mean more data, and more data means better, more valuable products.

For Apple, embedding AI features in smartphones helps revitalize device demand.

One of the reasons Apple's stock has been lackluster recently is that investors believe the company lacks a compelling "story" in artificial intelligence.

Undoubtedly, Apple would prefer to build this capability itself, but due to the lack of a massive server farm for training models, Apple has fallen behind. TF International Securities analyst Ming-Chi Kuo pointed out that catching up will come at a high cost, estimating that Apple will purchase up to 20,000 servers for AI development this year. Given the importance of the H100 chip for machine learning work, Apple may spend nearly $5 billion, but even so, it will still lag behind Meta.

Alphabet-C happens to have the AI "story" that Apple needs, albeit still in the experimental stage, now offering enhanced AI capabilities. Details of the collaboration have not been fully disclosed, and it seems that a complete agreement has not yet been reached Rumors cannot completely hold water

However, some analysts also point out that rumors cannot completely hold water.

First of all, the only part of Gemini that meets Apple's strict privacy standards is Gemini Nano. It can run locally, as Apple's AI chief John Giannandrea made clear a few years ago, any other way of running it "is technically wrong."

Allowing Gemini to run on Apple devices requires cloud access to work. However, Gemini Nano's functionality is very limited (text suggestions, grammar check, summaries), it cannot provide the generational leap that Apple and its next-generation Apple devices need.

Furthermore, reports indicate that this does not seem to be an exclusive deal, as Apple has also talked to OpenAI and is likely interested in other companies as well. However, just like search, users may also choose a general AI and stick with it, making the first-mover advantage unprecedentedly important.

In the long run, artificial intelligence is definitely not just a feature, and in the future, Apple will not be satisfied with long-term outsourcing. Apple is also developing its own AI projects, and once Apple can do it well enough on its own, it will shut out Alphabet-C and anyone else