Dan Ives, a well-respected tech analyst for investment bank Wedbush, recently predicted that a “formal,” AI-oriented alliance between Apple (AAPL) and Alphabet (GOOG) (GOOGL) would be announced in 2026 and enable AAPL’s market capitalization to reach $5 trillion next year, versus its current level of slightly over $4 trillion.
While such a formal partnership could very well be unveiled in 2026, evidence strongly indicates that the alliance would not come close to boosting Apple’s market capitalization by nearly 25%. Indeed, it’s difficult to envision a scenario in which a formal partnership between AAPL and GOOG would boost AAPL stock much at all. As a result, I would not recommend that investors buy the company’s shares based on Ives’ prediction.
Primarily due to the iPhone’s popularity and its high gross margins, Apple is one of the most profitable companies in the world. In the 12 months that ended in September, it generated income of $112 billion. Consequently, its market capitalization, which stands at about $4.04 trillion, is huge.
On the other hand, AAPL stock has lagged many of its Big Tech peers in recent years. In the last 12 months, the shares are up only about 7%, while they have gained 42% in the last two years. Conversely, GOOG, for example, has jumped about 60% in the last year and roughly 121% in the last two years.
One issue weighing on AAPL stock is the company’s inability so far to generate a great deal of revenue from the AI revolution.
AAPL’s top line increased 8% last quarter versus the same period a year earlier to $102.5 billion, and it has a trailing price-earnings ratio of 36.3 times.
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Ives indicated that AAPL’s market capitalization would be lifted by almost 25% by charging subscription fees for its AI offering. But Microsoft’s (MSFT) experience with its AI assistant, CoPilot, for which it charges some users subscription fees, strongly indicates that Ives’ vision is unrealistic. Specifically, in a post updated last month, Business of Apps reported that…
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