Apple and Google Soar on Rumor iPhones will Incorporate Gemini AI
Apple and Google Soar on Rumor iPhones will Incorporate Gemini AI
By:Mike Butler
The two tech giants may sign a licensing agreement on the artificial intelligence tool
- Apple and Google are in the headlines today after rumors swirled about a potential AI licensing agreement between the two mega tech companies.
- Gemini, Google's generative AI tool, could be incorporated into the iPhone.
- Apple has been a laggard in AI so far, but a potential deal could speed up its AI implementation.
- Both AAPL & GOOGL stocks are up significantly on after news about the possible agreement broke today.
Apple and AI—late to the party
Apple (AAPL) has not had a great start to 2024. The stock has dropped from a January 2024 high of $195.42 to $168.49 just a few weeks ago. This was while Bitcoin, Nvidia (NVDA), Advanced Micro Devices (AMD) and other tech stocks have soared to new highs.
Earlier this year, Apple announced it is moving away from its electric vehicle (EV) program and reassigning those efforts to artificial intelligence (AI). I would venture to say that Apple is not ignorant of the AI movement. There just hasn't been a firm decision yet on how the tech giant would move forward with AI implementation. It's becoming clear that a third-party deal may be the preferred route after Google's Gemini was rumored to be included in future iPhones, which could easily speed up the AI implementation. No official details have been released, but the big moves in AAPL & GOOGL stock tell us we should take the rumor mill seriously.
CEO and Co-Founder of Google DeepMind, Demis Hassabis, released a Gemini intro in December 2023: “Gemini is the result of large-scale collaborative efforts by teams across Google, including our colleagues at Google Research. It was built from the ground up to be multimodal, which means it can generalize and seamlessly understand, operate across and combine different types of information including text, code, audio, image and video."
Apple is set to release iOS 18 in September 2024, which is said to include a major functional overhaul. These early AI talks could hint at the fact that we may see AI in a large number of iPhone devices in just a few months.
Apple stock expectations for 2024
AAPL stock is coming off of 2024 lows after the AI rumor, but the stock still has a ways to go before it reclaims recent highs:
AAPL is up over $4.00 today (over 2%), which is the biggest rally we've seen in Apple since Feb. 2 of this year. Apple is expected to report earnings in May, as we can see with the implied volatility spike in the May monthly options expiration cycle.
The expected move through the December options cycle is +-$27.21, which isn't too high considering the recent moves we've seen in the stock price. It will be interesting to see if the stock exceeds this expected range to the upside or downside, depending on how the Gemini implementation rumors shake out.
Google stock expectations for 2024
Alphabet (GOOGL) is up much more than AAPL stock on the Gemini licensing rumor - the stock is up almost $10 (6.9%) today, which feels like a fast-track back to the recent all-time high of $153.78 the stock reached in January 2024. The stock is on a tear this month, rallying over $20 from the March low of $130.66 to this point.
Alphabet is set to report quarterly earnings in late April, as seen by the implied volatility spike in the April 26 options expiration cycle. GOOGL stock has an expected move of +-$28.83 through the December options cycle, which is a higher implied volatility than Apple as it stands.
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Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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