What We Learned This Week

AI Course Correction: It’s now confirmed that Apple will partner with Google to power key artificial-intelligence features, including a long-awaited overhaul of Siri slated for later this year. The move marks a notable shift for Apple, which has struggled to gain traction in the modern AI race after falling behind competitors like Google, OpenAI, and Microsoft in user-facing AI capabilities. Apple’s traditional strategy of waiting on the sidelines until technologies mature worked well in prior cycles, but in AI, early model training and scale matter. That approach left Apple playing catch-up, a challenge made clear by delays and missteps in its own AI rollout, particularly the absence of a meaningful Siri upgrade.

Partnering with Google appears to be a pragmatic course correction. Building large-scale AI models entirely in-house proved costly and time-consuming, while partnering allows Apple to focus on integration, user experience, and ecosystem control rather than foundational model development. As core AI capabilities increasingly commoditize, leveraging an established platform makes strategic sense. Details remain limited for now, but more is expected at Apple’s upcoming WWDC event. Apple and Google already share a long-standing relationship through search, and reports suggest Apple may pay roughly $1 billion annually for access to Google’s AI technology. If the result is finally a compelling, reliable AI experience on iPhone, the partnership could mark a meaningful turning point for Apple’s AI ambitions.

Scale vs. Deals: Netflix reported another strong quarter this week, beating expectations on both earnings and revenue while pushing its subscriber base to a record 325 million paid members. That represents roughly 23 million net additions since the end of 2024, driven largely by the continued success of its ad-supported tier. The results reinforce that Netflix still has room to grow and deepen penetration, even at its current scale. The market reaction, however, was muted to negative. After a long stretch of consistently strong performance, expectations are high, and sustaining this pace indefinitely is a tall order. At this point, solid execution is largely assumed rather than rewarded.

The company also provided an update on its proposed acquisition of Warner Bros.’ streaming and studio assets, first announced late last year. Netflix reiterated its commitment to the deal, raising its offer to an all-cash structure that effectively matches Paramount’s competing bid. While that move strengthens Netflix’s position, significant hurdles remain, including shareholder and regulatory approval. Large, transformative acquisitions can be distracting, and the challenge is ensuring the core business continues to perform while management navigates a complex transaction. Wall Street’s caution is evident, with the stock down roughly 30% since the deal was announced. If completed, the combination could be compelling for subscribers, but the path to getting there remains uncertain and costly.