UBS Sees Apple-Google AI Partnership as Inevitable for the iPhone Era

For years, Apple stood as the defining force in consumer technology, with the iPhone dominating global sales and its services ecosystem securing customer loyalty like no other. But the tech landscape is shifting rapidly. The rise of agentic artificial intelligence, which promises to minimize or even eliminate the need for traditional smartphone apps, has introduced a new existential challenge.

Suddenly, the smartphone no longer feels as indispensable as it once did, and Apple is exploring alliances that would have seemed improbable just a decade ago.

Recent reports suggest that Apple is testing Google’s Gemini AI technology as a potential backbone for a revamped Siri. According to these reports, Apple has requested a custom version of Gemini specifically built to operate on its Private Cloud Compute infrastructure. The implications are significant: such a model could power Siri across the iPhone ecosystem, extending into Safari and Spotlight search. This would allow Apple devices to provide instant AI-powered answers to common queries – from information about entertainment to quick knowledge lookups – without always routing users through Google’s traditional search engine.

Beyond this integration, Apple is reportedly working on its own AI-powered search product, internally referred to as World Knowledge Answers. The feature would surface AI-generated summaries of online information, directly challenging the rise of competitors like OpenAI and Perplexity. What makes this effort particularly intriguing is that Apple is leaning on Google, its long-time rival and search partner, to help build it. If successful, it would mark a strategic pivot where two historic adversaries collaborate in the face of disruptive threats to both their business models.

UBS, one of the most influential voices on Wall Street, weighed in recently with a detailed note. The bank acknowledged that Apple’s WWDC25 event in June failed to deliver breakthrough AI announcements, offering only incremental software updates. However, UBS analysts emphasized that investor conversations are increasingly focused on a forthcoming Apple-Google AI tie-up. In their view, it is not a matter of if Apple will partner with Google but when. This assessment reflects a growing belief in the financial community that Apple cannot afford to delay bold moves in AI while rivals advance aggressively.

Meanwhile, Apple is preparing for its upcoming “Awe Dropping” launch event, where it is widely expected to introduce the iPhone 17 lineup, including a thinner Air version. While the design refresh is sure to grab headlines, UBS analysts caution against expecting meaningful sales growth from form factor alone. Their forecast suggests that while the new iPhone might appeal aesthetically, it will not dramatically alter purchasing behavior in the September or December quarters.

What is striking in this moment is the juxtaposition of Apple’s two strategies. On one hand, it continues to push hardware innovation – slimmer devices, refined designs, incremental updates. On the other, it is increasingly signaling that its long-term survival depends on mastering artificial intelligence, even if that means deep collaboration with Google. If UBS is correct, the industry should prepare for a landmark announcement that could reshape how billions of users interact with both Apple and Google products in the AI-first era.