Analysts consider new Apple stock target price ahead of earnings | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Apple (AAPL) is enjoying some heavy traffic.

This may come as a shock to legions of fuming motorists all over the planet who spend a good portion of their day trapped behind their steering wheels.

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However, the computer giant is raking copious amounts of coin from Google in the form of Traffic Acquisition Costs,

The payments are made to ensure Google remains the default search engine for users of Apple devices when they search through Safari.

JPMorgan estimated that Apple receives $28 billion globally per year from Google parent company Alphabet (GOOGL) for these traffic acquisition costs, according to The Fly, $12.5 billion of which is for the payment of traffic generated from U.S. customers.

This has been an issue with the U.S. Department of Justice, which filed suit against Google. Last year a federal judge sided with the government, ruling that held an illegal monopoly on online search and advertising.

Apple CEO Tim Cook has faced calls to resign.

Image source&colon; Jamie Squire/Getty Images

Analysts cite Google payments to Apple

The penalties, restrictions or remedies related to this case have not been decided yet, but the court’s ruling is coming into focus ahead of Apple’s July 31 third-quarter earnings announcement.

JPMorgan weighed the implications for Apple from the remedies that are expected to be announced for the DOJ’s case against Google.

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The DOJ’s remedies, prohibiting Google from making payments for distribution, is a worst-case for Apple which would stop the $12.5 billion the iPhone maker receives from Google for U.S. traffic, the firm said.

JPMorgan said that it sees a 10% earnings hit for Apple in this scenario.

However, under Google’s proposed remedies, the firm sees only “modest changes at best by largely maintaining the current status quo.”

JPMorgan said that it sees an “opportunity for a potential middle ground” between the two remedies and kept an overweight rating on Apple shares with a $250 price target.

Apple shares are down nearly 15% this year and analysts at Bank of America Securities said they expect the company to report an in-line the third quarter and in-line to a slight revenue beat for the fourth quarter guidance.

“In our opinion, the worst potential outcome for Apple would be a ruling where Google is prevented from making ‘any’ payment to Apple,” BofA said. “However, even if it were to be the outcome, we would expect years of appeals to a ruling in this matter.”

“In what we consider a more likely scenario, if Google is prevented from paying Apple for exclusivity, we expect Apple to implement the equivalent of a choice screen from which users can select which search engine, they wish to use,” the firm said in a research note.

Mac sales can benefit from the launch of the new MacBook Air with M4 chip this past March, while iPad sales can benefit from expected launch of new iPad Pros with the M5 chip in the fall, BofA said in a note to investors.

Firm points to upcoming iPhone release

“As we head into F3Q25 earnings aftermarket on July 31, we see client sentiment as fairly negative given uncertain impact from tariffs, U.S. DOJ investigation App Store headwinds, and slow progress in AI,” the firm said.

Analysts have complained about Apple’s slow approach to AI and some investment firms have called for CEO Tim Cook’s resignation.

Analysts at LightShed Partners have reportedly urged the company to replace Cook, warning that Apple risks falling behind in a rapidly evolving tech landscape.

While Apple is famous for not rushing features to market until they’re ready, BofA said “the pace of AI development externally is blistering.”

“Apple’s slow timeline could leave it far behind in user expectations,” the firm said. “Each keynote that goes by with Siri still doing relatively basic things while competitors’ assistants converse and create content is a hit to Apple’s reputation for innovation.”

Apple is reportedly looking to buy web search engine Perplexity AI and BofA said that such a deal “would likely be positive for shares that are currently in the penalty box given Apple is largely viewed as an AI laggard.”

As far as President Donald Trump’s sweeping tariff agenda, BofA said the impact of the levies have been a meaningful headwind to gross margins.

“While tariffs can be a headwind to GM again in F4Q,” BofA said, “we model that quarter as the trough and subsequent GM improvement driven by better mix of higher (average selling price) products including the slim iPhone, which we expect Apple to launch this fall.”

The firm said it expects the slim iPhone to replace the Plus model from last year and be priced $100 higher.

“iPhone form factor changes have helped drive higher replacement rates in the past,” said BofA, which has a buy rating and a $235 price target on Apple shares.