Apple Faces $10B Revenue Risk in Google Legal Battle, BofA Maintains Buy Rating

Apple Inc. could lose up to $10 billion in annual payments from Alphabet's Google if it loses a pivotal legal battle over search revenue sharing, according to Bank of America analysts. The potential loss represents half of Apple's current $20 billion yearly intake from Google's traffic acquisition costs (TAC), which flows directly to the tech giant's high-margin services segment.

BofA analyst Wamsi Mohan notes the payments currently account for pure royalty-style revenue with nearly 100% drop-through to net income. Despite maintaining a $240 price target and Buy rating, Apple shares dipped 3% this week to $202 amid market concerns. The ruling would only affect US operations, preserving international search revenue streams.

Long-term Optimism persists around Apple's AI investments and financial resilience. 'The fundamentals suggest recovery potential,' Mohan observed, highlighting the company's capacity to offset losses through non-US Google payments and emerging technology initiatives.