The Motley Fool·2025-12-23 00:30Core Insights - The emergence of artificial intelligence (AI) has prompted a collaboration between tech giants Apple and Alphabet, previously rivals in the smartphone market [1][2]. Apple - Apple plans to license Alphabet's Gemini AI model for its Siri voice assistant at an annual cost of $1 billion, benefiting Alphabet as its stock price increased nearly 60% in 2025 [2]. - Apple reported record revenue of $416.2 billion for the fiscal year ending September 27, 2025, up from $391 billion the previous year, with a strong fourth quarter contributing $102.5 billion [5][6]. - The company appointed Amar Subramanya as the new head of AI strategy, indicating a commitment to enhancing its AI capabilities [7]. - Apple released the M5 chip in October, designed to support AI applications on its devices [8]. Alphabet - Alphabet has made organizational changes to improve its AI strategy, culminating in the launch of the Gemini 3 AI model in November [10]. - Google search revenue reached $56.6 billion in Q3 2025, up from $49.4 billion in 2024, driven by AI enhancements [11]. - Alphabet's AI initiatives are also supporting its self-driving car business, Waymo, which is expanding internationally [12]. Investment Comparison - The AI industry is projected to grow from $189 billion in 2023 to $4.8 trillion by 2033, indicating significant growth potential for both companies [14]. - Alphabet is considered a better investment option compared to Apple based on share price valuation, as its price-to-earnings (P/E) ratio has been lower throughout 2025 [15][17].