Google

An Office Hours question asked by Bob V., June 9, 2026.

Q: The Apple–Google deal for the frontier model is multi-year with no known end date. What happens after — and what is Google really getting out of it?

When that deal came out, people jumped to conclusions. I talked to Laura Martin {of Needham), who assumed Google would run Siri, and thus get all the data from Apple. Since that data was the real gold mine, even without much revenue from Apple, Google would begin to control the user’s data and experience. This would be check mate to Apple. I was skeptical from the start that Apple would ever release end-user data. That has now been made clear: this is a technology licensing deal including some Google training data but no services from Google and only some cloud capacity from Google using Nvidia chips but running Apple's own Private Cloud.

The follow-up sessions after the keynote answered most of it. Federighi and his staff have been adamant that Google gets nothing — certainly no data. Only one of the many models accessed through Core AI runs on Google Cloud, outside Apple’s own private servers. It’s the most powerful one, but it’s a world model, and Google has no access to anything. The tools aren’t Google’s either. It’s not Gemini. It’s not their image model. It’s Apple’s own foundation models, several of them, and one happens to run with Google in the cloud, privately and securely.

People assumed far more than what is actually happening here. Google's contribution is also probably swappable: at some point Apple may decide to do it themselves. And let’s not forget that Google sends Apple more than twenty billion dollars a year. So now Apple sends one back. What’s a billion between friends?

Apple is not going to give away the single most important thing it has, which is its relationship with the customer.

---

Editor’s Note: This was one of the questions asked by participants in Asymco’s June 2026 Office Hours live Q&A session, open to Asymco One subscribers.

---

Subscribe to Asymco One for more in-depth analysis and commentary like this.

Recording and transcript of the June 9, 2026 Asymco One Office Hours, recorded the day after Apple's WWDC 2026 keynote. Horace Dediu shares his impressions of the event and takes questions from Asymco One subscribers.

Recording

Subscribe to Asymco One to listen to the recording and read the transcript.

Transcript

Sign up and latest updates at asymco.com/live.

One Foundation Model runs on Nvidia GPUs hosted in Google’s cloud and some Google proprietary model data used to refine Apple's Models.

Apple has shared new details about the technology behind its latest Apple Intelligence platform, explaining how its new Apple Foundation Models (AFM) work and clarifying the company's relationship with Google. During a post-WWDC technical discussion, Apple executives said the company does not use Google’s Gemini models, Google Search, or Google Assistant infrastructure to power Siri or Apple Intelligence

Craig Federighi, Apple’s Senior Vice President of Software Engineering:

“Of course, we don’t have the Gemini app as our app. In fact, none of that client code is part of how we run on iOS. For these models, we use none of the models that Google deploy to their customers, nor do we use the infrastructure and means by which they deploy models to their customers. And then, when it comes to the knowledge base, we of course don’t use Google Search or anything like that as the foundation of our system. So I hope that’s clear. The amount of the Google Assistant we use is none.”

Source: The Mac Observer

NB: Apple introduced five foundation models.

• AFM Core (used for expressive voices and invitation capabilities on device)
• AFM Core Advanced (on device)
• AFM Cloud
• AFM Cloud Image image generation and editing tools, including spatial reframing
• AFM Cloud Pro complex reasoning and agentic actions; Nvidia GPUs hosted in Google’s cloud

These models are custom-built for Apple Silicon, trained using proprietary data, and refined using outputs from Gemini frontier models. The company emphasized that there is no direct use of Gemini itself.

Upgrades keep coming but are they justified?

Bank of America upped its price target on the tech giant, citing a potential boost from agentic artificial intelligence.

Shares rose 0.5% in premarket trading.

“In an agentic world, value accrues to the platform that controls user intent, personal context, app access, permissions, identity, authentication, payments, and trust,” analyst Wamsi Mohan wrote in a note to clients. “Smartphone is the scaled consumer device where these factors already converge. If AI assistants become the new front door to search, apps, commerce, scheduling, payments, and workflow completion, we think Apple should have meaningful leverage over model providers, app developers, merchants, advertisers, and payment networks.”

Mohan raised his price target to $380 from $330 and reiterated his Buy rating on Apple.
Delving deeper, Mohan said that the company's benefit in agentic AI comes from its semiconductors and iOS, as Apple's silicon can dictate what happens on a devices (which is important for latency, reliability, privacy and costs) and iOS will determine how the AI is used by the user. “Our analysis around token usage suggests Apple will need to rely on distributed compute (on device), Private Cloud Compute and third-party compute to deliver a robust AI experience,” Mohan added. “Removing the net cash neutral target, in our opinion, is a reflection of a new period of AI-driven investments to enable this agentic era.”

As such, Mohan believes that the coming Siri redesign needs to be integrated into the iPhone and make it an agent that is capable of understanding intent, retrieving context, bringing up apps, and completing workflows. If this were to happen, an agentic version of Siri could boost fiscal 2030 revenue between $15B and $30B, or as much as $40B to $65B if users really became acclimated to it.

Source: Seeking Alpha

NB: Updated price targets with BofA change highlighted.

Horace speaks carefully and with knowledge about opinions, facts and fantasies, and shares what he thinks John Ternus’s most important job is.

Topics include:

• Is a crash coming? 
• The CapEx problem
• AI and Apple
• Convergence vs. fragmentation
• Ternus and Apple's culture

Now in Beta for asymco one subscribers

Listen to Asymetric in your favorite podcast app.

Q4 expectation: down 50% y/y

“Within the PC segment, Chromebooks are currently the most impacted category, with volumes declining significantly,” said Kieren Jessop, Principal Analyst at Omdia. “Production indicators point to a weak near-term outlook, and education-related deployments are increasingly being deferred until market conditions stabilize. Ongoing supply constraints are also expected to delay the second phase of Japan’s GIGA School Program 2.0. While the first phase - extended from end-2024 through end-2025 - was completed without major disruption, the current supply environment is likely to introduce delays in the next phase.”

All major Chromebook vendors faced challenges in Q1. Lenovo, which ranked first and was a key participant in Japan’s GIGA School Program alongside its subsidiary NEC, saw shipments decline 11.2% year on year to 1.5 million units as the first phase of deployments concluded. HP ranked second, shipping 1.0 million units, down 15.3% year on year. Acer placed third with 937K units, managing a relatively smaller decline supported by stable shipments in North America and increased shipments into APAC. Dell experienced the steepest decline among the top five vendors, with shipments falling 28.3% year-on-year to 413K units. ASUS, another key participant in Japan’s GIGA School Program 2.0, was the only vendor to record growth in Q1, with shipments rising 3.5% year on year to 406K units, accounting for a 9% market share.

Source: Omdia

NB: When the only type of buyer is a government agency and there's only a handful of them, things can turn scary bad very quickly.

Asked by Jay Goldberg

Q: Do you think Apple will start investing heavily in AI data centers?

There's rumors and actually statements from Apple saying that they're working on a server chip. Google has a server chip. Amazon's got a server chip. These are effectively aimed at Nvidia. And if you can make something, you tend to do it. Now, of course, there's some protection — Nvidia's got other special sauce, but their margin is everybody's opportunity. They have a huge margin. And everybody's writing huge checks. As I say, hyperscalers are just handing over their entire cash flows to Nvidia. And that means their shareholders' entire wealth is being handed off to Nvidia shareholders. So there's a transfer of wealth happening right now. Presumably, because we're going to get some benefit later, but if that's happening and people are irritated by it, they're going to find a way to do what Nvidia does.

And Apple, of course, can and will do that. Now, whether that'll get deployed at the edge or in Apple's own cloud — because they probably also don't want to write checks to Nvidia, and they'll say, well, we can do it, and we won't necessarily sell them, like Google wants to. They'll probably just use them themselves. And that's something certainly they're capable of.

The question I was always asking is how many are we talking about? Because if it's in the tens of millions, or even single-digit millions — for Apple, single digits. Is it worth it to develop your own designs? There's a limit to how many you can deploy. And probably you're going to have to replace them every so often, so there's a question about how much it costs to keep on the treadmill.

But it is an interesting question, and I think everybody's capable of doing what Nvidia's doing. But it's about execution, timing, delays. Look at what happened with the Qualcomm chip — how long it took Apple to finally deploy the communications chip relative to the amount of grief it had to deal with. First, of course, it moved out of Intel. It moved out of Qualcomm now, and now the question is, is it going to move out of the server supplier chain? And that's a complex decision. But again, Apple's not doing it because they want to be in that business. It's more that they want to avoid dependency.

This was one of the questions asked by the participants in Asymco's May 2026 Office Hours live Q&A sessions, open to Asymco One subscribers.

See also: May 2026 Office Hours

An Office Hours question asked by Fred S., May 1, 2026

Q: Ever since Johny Srouji started talking about Apple Silicon and the power consumption for the performance and the unified memory, and now we've seen the Mac mini surge, I just wonder about high-end computing. The whole area of where that Mac architecture may go beyond its success as an individual consumer computing product. From all the high-end workloads that might be coming their way.

The story of Apple is one of personal computing. It's not a story of servers, it's not a story of clouds, it's not a story of centralized computing. They've tried once or twice to make a server product, and they abandoned it. They've even abandoned the high-end Pro product, and created the almost-as-fast Studio product.

Now, that does not mean they're shying away from high-power computing. They're just saying, we're going to put that high-power computing in a desktop, or in the laptop, or even in the phone. Everyone who's grown up throughout the personal computer era can remember Moore's Law, and how exponential growth has driven computation to levels that seemed impossible just a few years earlier. We've hit some slowdowns, but fundamentally, the potential exists.

And by the way, it's not even a classic computational CPU problem. We're dealing with AI. We're mostly dealing with high bandwidth, large data, and we're dealing with simple calculations on it in parallel, which means the architecture is much more around large matrix computations. This is why Nvidia came from graphics. Graphics was the same problem — a graphics accelerator is a matrix problem. And so is machine learning. So different variations of these have come in as a sort of a parallel to the CPU, the general computation problem.

The idea Apple has is that they're going to catch up with whatever is done on the server, they're going to do it on the device. You can call it Edge, you can call it personal — the old term was personal computing.

I may be naive, but I think we'll get very powerful desktop computers that can do what is essentially AI, but for the individual. The other aspect here is that Apple is a consumer company, not a B2B company — it's a B2C. They want to bring that power to as many people as possible. And they're certainly delivering hundreds of millions of computers a year. Nvidia's making tens of millions of computers a year. Apple is capable of doing orders of magnitude more.

So I think they're going to affect the disruption in AI. It's not going to be that there's no profit in AI, it'll be that it'll be done with Edge more, especially as it doesn't have to be a world model — it can be a personal model. If you want to look up something globally, you can use the cloud, but if you want to deal with tasks in your world, you're going to work with Apple computers.

It may take years to get there. But in the meantime, I don't think a centralized service — these OpenAI, or Anthropic, or Microsoft, who are trying to make us a singular superintelligence — is necessary for everyone. It'll be a good reference, but it's not how you want to handle your personal information. So I think that's what the future is, and I think Apple's very much planning for it.

It sounds cliche, but when Apple started, it was IBM that dominated computing. And IBM was about centralized computing, and their thesis was everything we now call "the cloud" — but it was all in one big computer that served the entire organization, whether that organization is a government or a big company. And then we went to mini computers, then we went to desktop computers, then we went to portable computers.

Then, fast forward 25 years and we had Google. Well, now central computing is the internet. In the internet, everything needs to be indexed to be able to be found. So they created an index in the cloud. And then a lot of companies moved that computing they used to have locally into the cloud, as a shared resource from Amazon, AWS, and others, and that became cloud compute. Even now, those are the drivers for growth for Microsoft and Amazon and Google.

The AI part of that is tiny — there's revenue from AI, but there's a lot of revenue from cloud. That still is valuable. But that's not a job for consumers. You do some things in the cloud — you store things, you search, you communicate in messages and so on. But most of the data that matters to you will get also indexed locally, so you can pull up your photos, pull up these things, and it'll be a blend of the two.

So that's where Apple lives, and I don't see anything fundamentally changing about this, because computation tends to commoditize. Software tends to be replicated. Algorithms tend to be replicated. In fact, even the AIs we have today were all because people publish papers, and one company invents it, another implements it, as was the case with the transformer. As far as I understand, it was Google who actually wrote the paper on it.

---

Editor's Note: This was one of the questions asked by the participants in Asymco's May 2026 Office Hours live Q&A sessions, open to Asymco One subscribers.

Asymco Bulletin is a digest of all the work we have published for the week ending May 3, 2026.

Editor's Note: Starting next week, we will be sending Asymco Bulletin to Asymco One subscribers only. You will still receive Updates when new posts are published per your notification settings.

Office Hours

Asymco Office Hours — Apple Fiscal Second Quarter 2026 Review: The Presentation

In Asymco One's May 1, 2026 Office Hours session, review of Apple's Q2 2026 earnings, segment growth: iPhone at 22%, Services at 16%, iPad at 8%, Mac at 5.7%, and wearables at 5%. Steady, foundational growth of Services, Gross margins reached nearly 50%, R&D spending surged, a shift in Apple's capital return strategy showing perhaps the hand of John Ternus. Guidance suggests 16% revenue growth, 22% EPS growth. Analyst sentiment turned positive post-earnings, with most price targets rising above $310. Apple's evolving identity as an engineering-centric company was the focus of many questions. →

Research

Expectations for the Quarter

Revenue and EPS consensus, year-ago results and my expectations Yahoo Finance Yahoo Finance’s revenue estimate for Apple in Q2 stems from 31 analysts. As of April 25, the average estimate is $109.69 billion, with a low of $107.08 billion and a high of $115.37 billion. For the earnings per share estimate, 32 analysts put it at an average of $1.95. The low is $1.56 and the high is $2.16. TipRanks TipRanks also does its own analyst polling on Apple’s quarter. In its forecast as of April 19, its consensus is for a revenue of $109.45 billion, with a high of →

---

Nota Bene

The Economist Interview: Hints at the future direction of the company → As is often the case, a 45 minute discussion turns into two sentences. The article sadly does not provide hints at the future direction of the company. But we can…

TD Cowen: 15% revenue growth, 10% growth guidance → Apple is projected to gain market share in both smartphones and PCs, driven by strong iPhone 17 demand and the new MacBook Neo, with anticipated revenue growth of over 15% in Q3 and positive sentiment ahead of earnings.

UBS Raises Price Target from $280 to $287 but Maintains Neutral Rating → Apple's fiscal Q2 shows promise with iPhone strength and solid Mac demand, especially for the budget-friendly Neo and AI-capable Mac mini, potentially boosting earnings beyond expectations.

Morgan Stanley forecasts fiscal second-quarter EPS of $1.74 → Despite memory pricing pressures, Apple's strong iPhone sales, potential AI and foldable iPhone announcements, solid free cash flow, and favorable market conditions position it for better-than-expected earnings and a possible stock rise to $300 by September.

Is Apple borrowing Samsung’s Market Expansion Strategy? → Bernstein SocGen maintains optimism on Apple's strategic pricing and ecosystem strength, forecasting EPS growth and potential market share gains, while Samsung faces smartphone profit challenges but thrives in memory.

Separately, it’s been reported that Samsung might see its first operation loss from its phone division, resulting in Apple capturing 100% (or more) of global smartphone profits. Simultaneously, Samsung is seeing huge profit gains from memory, even overtaking Nvidia’s profitability. This is remarkable…

Apple share of the smartphone SoC market grew from 15% to 19% in Q1 → In Q1 2026, global smartphone SoC shipments fell 8%, but Apple thrived in the premium market by leveraging its efficient supply chain and passing costs to consumers, boosting its market share from 15% to 19%.

Google to sell TPU chips as Gemini shows returns → Why pour cash into Nvidia when you can craft your own cutting-edge chips like Google, and then turn that innovation into a lucrative side hustle by selling them to tech giants like Meta and Anthropic?

The Vision Products Group Expanding → Gurman's 2025 dissolution claim clashes with 2026's active Vision Products Group hiring spree. The Vision Products Group posted 14 new senior roles last week.

---

Asymco One gives you full access to our research, analysis, and commentary. Subscribe with code BULLETIN for a discount.

Feedback: Have questions or comments? Reach out to us at contact@asymco.com. We’d love to hear from you.

Why give all your cash to Nvidia? Why not make your own chips? Then why not sell them?

Google said that it plans to sell its custom Tensor Processing Units (TPUs) to select customers who will install the chips in their own data centers.

The move is a change from Google’s prior strategy, which saw it rent out TPU capacity to customers from its own data centers — and is yet another strike at AI chip king Nvidia.

The announcement, during the company’s Q1 earnings call, comes a week after Alphabet announced two new TPUs: its TPU 8t for AI training and TPU 8i for inferencing.

Alphabet didn’t disclose potential customers, but it signed a multiple-gigawatt agreement for next-generation TPUs with Anthropic earlier this month, with chips expected to begin coming online in 2027.

And according to The Information, Alphabet has also entered into a multibillion-dollar chip deal with Meta (META).

Source: Yahoo Finance

NB: Alphabet Q1 sales grew 22% to $110 billion, with Cloud up 63% to $20 billion. Operating margins grew by 220 basis points, with services and cloud operating margins both increasing y/y.

The search business continues to benefit from AI. AI overviews and AI mode are sustaining as search sales grew 19%.

Supply disruptions strengthen the strongest

Global smartphone system-on-a-chip (SoC) shipments declined 8% year-over-year (YoY) in quarter one (Q1) of 2026, according to Counterpoint Research’s latest Global Smartphone SoC Shipments Preliminary View report. However, it’s good news for Apple.

Counterpoint says the premium segment has remained relatively resilient, with higher costs largely passed on to end consumers. Meanwhile, the entry-level manufacturers are increasingly adopting lower-cost chipsets to keep smartphone prices competitive.

Qualcomm and MediaTek recorded double-digit declines in shipments. In contrast, Apple, Samsung, Google and UNISOC posted positive growth.

Apple saw its share of the global smartphone SoC market grow from 15% in the first quarter of 2025 to 19% in the first quarter of 2026. Some explanation: A smartphone SoC (System-on-a-Chip) is a single, integrated chip that combines all essential computing components—CPU, GPU, memory, and connectivity modems (5G/Wi-Fi)—into one unit.

Apple silicon is a series of proprietary, ARM-based systems-on-a-chip (SoCs) designed by Apple for its ecosystem, providing high-performance computing through a unified memory architecture and specialized components. They power iPhones (A-series), Macs (M-series), iPads, and wearables (S-series), focusing on superior power efficiency and security.

Source: Apple World Today

NB: Counterpoint Senior Analyst Shivani Parashar says that their integrated supply chains helped …