Apple (NASDAQ:AAPL) faces a potential 6% EPS hit as its Services crown jewel comes under fire from simultaneous Epic and Google antitrust battles, Evercore ISI warns.
The Street estimates that Google’s $2024 billion annual payment to make Safari its default search engineabout half U.S.-basedis at risk from the DOJ’s suit, while Apple’s App Store could lose roughly $7 billion in U.S. developer fees under the judge’s Epic Games ruling. Services, which generated $96.17 billion in fiscal 2024 (up from $85.2 billion in 2023), is Apple’s fastest-growing segment, and any erosion could materially damp growth.
Evercore’s Amit Daryanani notes that Safari search volume fell in April for the first time everan ominous sign for ad-revenue sharingand that the DOJ’s push to force Google to divest its Ad Manager and Exchange could further squeeze Apple’s cut.
On the App Store front, the judge ordered third-party payment options on iOS, threatening that ~$7 billion in annual fees; if fully lost, Daryanani says EPS could slide 6%, though he expects a smaller actual impact. Evercore still sees upside: it argues the Epic decision may be overturned on appeal as an unjust seizure of private property and maintains an Outperform rating with a $250 price target.
Why It Matters: With Services now over $96 billion and growing faster than hardware, any shake-up from these cases could dent Apple’s valuation multiple and investor expectations.
This article first appeared on GuruFocus.
