Apple (AAPL) May Take a $10B Hit From Google Ruling, Yet Analyst Sees Upside

Apple Inc. (NASDAQ:AAPL) is one of the AI Stocks Analysts Are Watching Closely. On August 4, BofA Securities analyst Wamsi Mohan reiterated a Buy rating on the stock with a $240.00 price target.

According to the firm, Apple may lose half of the $20 bn along with annual payment from Google if it is not required to pay Apple anything related to search.

“In our opinion, if Google is mandated to not pay Apple for anything related to search, then Apple could potentially lose half of the $20bn+ annual payment from Google. This amount is accounted for as part of Apple Services revenue (as Google TAC) and has a high drop-through to the bottom line (it’s a pure royalty type payment).

Image by Gerd Altmann from Pixabay

The firm believes the ruling would only apply to the US, and that Apple should be able to receive payment for search traffic sent to Google outside the US.

“We estimate that Apple may lose half of the $20bn since we believe the judge’s ruling would likely apply only in the U.S. (given the court’s jurisdiction) and we estimate about ½ of Google’s search Ad revenue comes from the U.S. Apple should still be able to get paid for search traffic sent to Google outside the U.S. In this scenario. We estimate that the potential loss $10bn+ would represent about 8% of Apple’s annual operating profit dollars.”

Apple is a technology company known for its consumer electronics, software, and services.

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