Apple risks losing the AI race: why analysts don't believe the Google deal?

Analysts have warned that Apple's plans to integrate Google's Gemini AI models into Siri may not solve the problem, but only intensify the crisis around the voice assistant. Nevertheless, the very news of the talks has sent shares of both Apple and Alphabet - Google's parent company - soaring. Investors' attention is now turned to Apple's annual presentation on September 9: the company is expected to outline its key AI plans and unveil a new iPhone.

Apple's plans for a major Siri update, which could include integrating Google's Gemini AI models into the iPhone, will only accelerate the company's crisis, according to Radio Free Mobile analyst Richard Windsor. According to Bloomberg, two options are in the discussions: keeping Apple's own development and creating a customized version of Gemini that would run on Apple's servers. However, no final agreement has been reached yet.

As MarketWatch notes, citing an expert, if Siri remains unchanged, Apple will be able to preserve its image, but risks losing out to Android smartphones equipped with AI assistants. At the same time, the integration of Gemini, according to Windsor, will lead to the loss of part of the brand value, and the customized version will still be inferior to the flagship solutions on the market.

Thus, in both scenarios, Apple risks facing an exodus of users towards competitors, summarizes the analyst.

The negotiations between Apple and Google became known on August 22. On this news, Apple shares rose by 1.3%, but the main beneficiary was Google: the securities of the parent company Alphabet added 3% and reached a historic high of $210.5. At the same time, since the beginning of the year, Apple shares remain in the negative by 6.7%, although since the end of July managed to recover 6.3%, notes MarketWatch.

At the pre-market on August 27, the dynamics looks restrained: Apple securities add 0.1%, while Google shares are down 0.3%.

Evercore ISI analyst Amit Daryanani believes that a possible partnership between Apple and Google on a Siri update will be welcomed by the market amid concerns over Apple's lagging AI efforts, Investor's Business Daily reported.

While the company is capable of developing an improved version of Siri on its own, he said, using Gemini would allow it to accelerate the adoption of generative AI while maintaining a less capital-intensive approach.

Apple is noticeably lagging behind in the area of generative AI. A long-announced major update to Siri, which was supposed to teach the assistant to understand personal context and fully control the device by voice, was scheduled for release as early as last spring, but the release was delayed by about a year due to engineering difficulties, Reuters notes.

Negotiations with Google on AI collaboration could be an important strategic transformation for Apple, the agency emphasizes. The main obstacle remains a strict privacy policy, which builds brand value but also complicates the training of large language models that require processing of huge data sets.

The company could reveal the next step in AI development as early as September 9, MarketWatch adds. As Bloomberg wrote, Apple will show off its new iPhone 17 lineup, including the ultra-thin iPhone 17 Air, as well as the Pro and Pro Max models. An iOS 26 release with updated design and AI features, the new Apple Watch Series 11 and Watch Ultra 3 with satellite connectivity, the more affordable Watch SE 3 and updated AirPods Pro 3 are expected, The Verge writes.

This article was AI-translated and verified by a human editor