Key Points
The Information reports that Apple will lease data centers from Google for Siri.
Apple has already teamed up with Google to help fix its Apple Intelligence AI service.
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Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) stock slipped 2.1% through 11:25 a.m. ET Monday on broader market worries over war breaking out in Iran, and across the Mideast, over the weekend.
But isn't there more reason to buy Alphabet stock today than to sell it?
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War in the Mideast, peace with Apple
Broad market jitters are understandable, but Alphabet actually may have good news for its shareholders today, with The Information reporting that Apple (NASDAQ: AAPL) has agreed to lease data center capacity from Google to support its Siri artificial intelligence service.
Apple and Alphabet jointly announced in January a "multi-year collaboration" through which Apple's Apple Intelligence (i.e., Siri) service "will be based on Google's Gemini models and cloud technology." At the time, Apple stated that "Google's Al technology provides the most capable foundation for Apple Foundation Models."
Now it seems Apple thinks Google's AI hardware infrastructure is pretty nice as well, and will pay Alphabet even more money to make use of it.
Is Alphabet stock a buy?
There's no information in The Information on how much Apple will pay Alphabet to lease its servers. And honestly, it would take a lot of money to move the needle on Alphabet stock.
Valued at $3.8 trillion, Alphabet shares sell for 28.5 times trailing earnings today, and more than 51 times trailing free cash flow. Analysts have Alphabet pegged for 14% annualized earnings growth over the next five years, which isn't a lot to justify such a high stock price.
Even with more money coming from Apple for data center leasing, I see Alphabet stock as overpriced today -- and a sell.
Should you buy stock in Alphabet right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
