Dan Ives, a respected tech analyst for investment bank Wedbush, recently made a bold prediction about a potential AI-oriented alliance between Apple (AAPL) and Alphabet (GOOG) (GOOGL) that could be announced in 2026. He suggested that this formal partnership could push Apple’s market capitalization to $5 trillion, a significant increase from its current level of slightly over $4 trillion.
While the idea of such a partnership is intriguing, many experts believe that it may not have as significant of an impact on Apple’s market capitalization as Ives predicts. In fact, it’s challenging to see how a formal alliance with Google would dramatically boost Apple’s stock. Therefore, investors may want to approach this prediction with caution and not base their investment decisions solely on Ives’ forecast.
Apple is already one of the most profitable companies globally, thanks to the immense popularity of its iPhone and high gross margins. In the last 12 months, the company generated a staggering income of $112 billion, leading to its current market capitalization of approximately $4.04 trillion.
However, Apple’s stock performance has lagged behind many of its Big Tech counterparts in recent years. While the shares have seen a modest 7% increase in the last 12 months, they have risen by 42% over the past two years. In comparison, Google’s stock has surged by around 60% in the last year and a substantial 121% in the past two years.
One significant factor weighing on Apple’s stock is its struggle to capitalize on the AI revolution. Despite a modest 8% increase in revenue last quarter to $102.5 billion, Apple’s trailing price-earnings ratio of 36.3 times indicates some challenges in leveraging AI to drive revenue growth.
Ives suggested that Apple could boost its market capitalization by nearly 25% by introducing subscription fees for its AI offering. However, Microsoft’s experience with its AI assistant, CoPilot, which charges subscription fees to some users, casts doubt on the feasibility of Ives’ projection. Business of Apps reported that Microsoft Copilot had 33 million active users and generated about $400 million in direct revenue in 2024. Even if Apple could replicate these numbers, the impact on its stock value would likely be minimal.
Furthermore, Apple’s historical track record under CEO Tim Cook has shown underwhelming results in innovation, from developing a car to Apple TV and AI. This history raises doubts about Apple’s ability to turn its AI offering into a significant driver of stock value.
In conclusion, while the potential partnership between Apple and Google is intriguing, investors should approach Ives’ prediction with caution. Apple’s stock performance may not see a substantial boost from this alliance, and other factors, such as its struggles in AI monetization and historical innovation challenges, could limit the impact on its market capitalization.
