Apple to use Alphabet's Gemini LLM for its AI platform as iPhone sales rise

Apple is no longer the most valuable company in the world—a title it held for some time before being displaced by Nvidia last year. Still, the company remains a major global technology leader, and it has a distinct advantage in artificial intelligence (AI) despite not being viewed as the front-runner in the space.

2.5 billion devices

In its fiscal 2026 first-quarter report (ended Jan. 25), Apple CEO Tim Cook said the company now has 2.5 billion active devices. Cook described this as “a testament to incredible customer satisfaction for the very best products and services in the world.”

This large “installed user base” gives Apple broad exposure to AI engagement. Apple Intelligence is expected to be used across Apple devices, and the company has released exclusive AI services with new iPhones, along with updates for older models that have sufficient processing power.

Cause: market disappointment over slower AI progress

Last year, the market reacted negatively to Apple’s AI progress, with investors concerned the company was not keeping pace with other major technology firms such as Amazon, Alphabet, Microsoft, and Meta Platforms. Those companies have been developing their own large language models (LLMs), and expectations had been building for Apple to move into deeper AI capabilities.

Development: a different AI strategy

As Apple’s AI rollout faced skepticism, its AI peers announced larger and larger investments in their platforms. The article notes that Amazon’s capex is expected to reach $200 billion in 2026 alone, highlighting the scale of spending across the sector.

Apple has pursued a more measured approach. The company recently announced a deal with Alphabet to use its Gemini LLM to support Apple Intelligence foundation models. Apple is also expected to launch an updated Siri in the coming months. The article reports Apple will pay Alphabet $1 billion annually for use of the LLM, described as a fraction of what competitors are investing in AI.

Data and performance: iPhone momentum

Apple’s advantage is also tied to its hardware and ecosystem. The article emphasizes that Apple Intelligence is integrated into the Apple ecosystem, led by the iPhone.

In the first quarter, iPhone sales increased 23% year over year. Total sales rose 16%, which the article says reassured investors that Apple still has a strong base of loyal customers.

Impact and outlook

The article argues that, for now, users value Apple’s broader features more than the AI capabilities it does not yet offer. As Apple continues to build its AI business and expands its user base, it may be positioned to benefit from advances in the sector.