Technology analyst Dan Ives suggests that the market is awaiting a clear AI strategy from Apple (AAPL.US), and a potential collaboration with Alphabet (GOOGL.US) could serve as the much-anticipated catalyst. "The market's core expectation for Apple now hinges on the realization of its AI partnership with Google. This is precisely what could drive Apple's stock toward $400," Ives stated in an interview.

The day before Ives' remarks, reports emerged that Apple plans to integrate Alphabet's Gemini AI model to enhance its voice assistant Siri, slated for release in spring 2026. According to insiders, Apple is set to pay approximately $1 billion annually to license a cutting-edge AI model developed by Google, featuring 1.2 trillion parameters—a key metric for AI complexity. This model would fulfill Apple's long-delayed promise to overhaul Siri's underlying technology.

After extensive evaluation, the two tech giants are finalizing the agreement, signaling Apple's reliance on Google's expertise to rebuild Siri's core architecture and pave the way for next-generation functionalities. Google's 1.2-trillion-parameter model vastly surpasses Apple's current AI capabilities.

Goldman Sachs strategist David Kostin echoed Ives' sentiment, stating, "Dan Ives has pinpointed the critical issue—the market is waiting for Apple to present a clear AI roadmap. A substantive AI partnership with Google could shift Apple's valuation framework from hardware-cycle-driven to platform-monetization-driven."

Ives also criticized Apple for a "major strategic misstep" in failing to pursue AI-related acquisitions, remarking, "They could have acquired Perplexity (an AI startup)." He added, "But now it's clear: Apple has no choice but to fully collaborate with Google, while Google stands to grow its annual revenue in this segment from $20 billion to $30 billion."

Last week, Apple reported better-than-expected Q4 FY2025 earnings, with revenue rising 7.9% year-over-year to $102.5 billion, slightly above the $102.2 billion consensus. EPS climbed to $1.85, beating estimates of $1.77. iPhone revenue grew 6.1% to $49 billion, driven by new models, though slightly below the $49.3 billion analysts had projected.