Google Antitrust Ruling: A Windfall for Apple's AI Strategy and Revenue

What Alphabet's favorable antitrust ruling means for Apple and its investors

Jim Cramer says the favorable ruling in Alphabet's landmark antitrust case could unlock billions of dollars of additional revenue for Apple. Club stock Apple jumped more than 3% on Wednesday after a federal judge ruled that Alphabet can continue making payments to preload its Google Search onto iPhones and other Apple devices. However, the late Tuesday decision handed down by Judge Amit Mehta, who has been overseeing the Google Search antitrust trial, prevents Alphabet from paying for contracts with preconditions such as making its Google Search the exclusive search option. On Tuesday evening, during CNBC's "Mad Money," Jim described it as "shockingly favorable." He added, "This is a huge win for Alphabet, but it's also a big win for Apple." The reason why this is so good for Apple is two-fold. For starters, Apple can continue to collect this highly profitable revenue stream from Alphabet in exchange for the preloading and placement of Google Search in its Safari browser. Google is estimated to have paid Apple some $20 billion per year as part of that relationship, which benefited Google because Apple was driving tons of traffic to its search engine. With minimal costs associated with generating that revenue for Apple, most of it just flows to the bottom line. The market had been concerned that the judge might bar Google from making any sort of payments in exchange for traffic. But beyond that, the ruling opens the door to Apple being able to work out similar agreements with large language model providers to bring AI services to the Apple ecosystem, particularly Siri. Apple has struggled to develop the AI-enhanced version of Siri that Apple so sorely needs to drive a big upgrade cycle for iPhone sales. Updates over recent months make it clear that they're likely to leverage a third-party company as the underlying technology provider to accomplish that, if not outright buy one of them. Currently, Apple gives Siri users the option to punt more complex queries to OpenAI's ChatGPT. Now, with the remedy ruling, Apple has the ability to get paid in those future relationships for driving traffic to the AI chatbots in addition to search. That could mean billions more in payments each year to Apple's crucial Services division, which includes the App Store, iCloud, Apple TV, and others. "With this ruling, the tables can be turned," Jim said Tuesday night. "That bot company will have to pay Apple because it's legal. What a turn of events. Maybe it's another $20 billion headed Apple's way. Maybe [it's] more," he added. Wall Street analysts agree with Jim that this is a great outcome for Apple. Evercore ISI, in particular, noted that the ruling will require Google to renegotiate its deals annually rather than on a multiyear basis, which could be beneficial for Apple. "We think this is a net positive for Apple, which not only will maintain receipt of its ~$15-20B payment from Google but will also allow Apple to renew the deal each year." The Evercore analysts, who reiterated a buy-equivalent rating on the stock, added, "This gives Apple more leverage in search engine negotiations and paves the way for an eventual AI-enabled search engine becoming the default on Safari, whether that be with Gemini or another model builder." Morgan Stanley analysts called the outcome a "near best-case scenario." They added, "Effectively, Apple needs to offer a bit more flexibility in distributing search to users, but the remedies are even more watered down than we expected." AAPL YTD mountain Apple (AAPL) year-to-date performance Mehta's decision is a second major positive for Apple in less than a month. Late in the day on Aug. 6, Apple CEO Tim Cook was able to ease tensions with President Donald Trump . Cook announced, at a White House event, an additional $100 billion investment in U.S. manufacturing. Over the past 30 days, the stock has jumped more than 16.5%. Despite the nice run of good news, Apple shares were still down over 5% year-to-date, compared to the S & P 500 's more than 9.5% advance. Apple had a rough start to 2025 as investors worried about the Google case, the company's lackluster generative artificial intelligence rollout, as well as increasingly heated smartphone competition in China and tariff headwinds. With Google and some of the tariff concerns behind us, Apple needs a strong showing at its Sept. 9 product event, when the iPhone 17 is expected to be unveiled. Just last week , we were talking about reports of a new, thinner design and Apple's first in-house modem chip. In a note to clients, Goldman Sachs was bullish on Apple's lineup of expected iPhone 17s -- and, as a result, forecasted an upside to iPhone revenue. Investors are still going to want to hear about Apple's plans for AI. But the ruling in the Google case ensures that Apple has a full toolbox to build a solution that benefits both iPhone users and its stock price. (Jim Cramer's Charitable Trust is long AAPL, META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Apple is the big winner in Google antitrust penalty ruling

Wall Street analysts believe that the favorable antitrust ruling won by Alphabet could benefit Apple even more, by letting the iPhone maker license generative artificial intelligence products outside of the Google ecosystem. After Google was found to hold an illegal monopoly in its core market of internet search last year, the U.S. Department of Justice suggested Alphabet divest some of its assets, including selling off its Chrome browser. But the company avoided a worst-case scenario on Tuesday after a U.S. District judge ruled against some of the more severe proposed consequences, including a potential breakup. In the decision, the court said Alphabet won't be forced to sell Chrome, but will be barred from exclusive contracts that condition payments or licensing. In response, Wall Street sent both Alphabet and Apple higher, with investors viewing the decision as an even bigger win for the iPhone maker. Alphabet and Apple gained anywhere from 3.5% to 8.5% each in early trading. "In what we'd describe as a near best-case scenario, AAPL can still collect [traffic acquisition costs] from GOOGL (with conditions) and can renegotiate the default search socket annually, better than our prior 'Scenario 4' framework & likely resulting in an immaterial, to potentially positive, financial impact," Morgan Stanley wrote in a Wednesday note. While Google will have to stop exclusivity payments for using its search function, the company can still pay for distribution on iPhones, including as the default search engine, Baird said. The bank estimated Google's annual payments to Apple at roughly $20 billion, or about 20% of Apple's Services revenue -- 5% of its total revenue -- and including "disproportionately high margins." Analysts also highlighted Alphabet's loss of exclusivity as a major catalyst for Apple, since this will allow it to license other non-Google AI products even though Google's payments will continue to Apple. "Non-exclusivity remedies allow AAPL to license non-GOOGL GenAI products (e.g. OpenAI)," TD Cowen wrote. "AAPL's Safari browser has the option for alternative [generative search experiences] for many years and AAPL currently licenses OpenAI's ChatGPT product." TD Cowen added that Google's revenue share payments could be a benchmark and "valuable pricing reference" to negotiate future revenue sharing from various generative AI partnerships, especially once Apple begins planning to offer a generative AI search option in its Safari browser. This will likely become more relevant as chatbots grow more popular as an alternative to the traditional search engine experience. Tuesday's positive decision helped reinforce Wall Street's bullish view on shares of Apple, with most analysts maintaining their buy-equivalent rating. Here's what analysts at some of the biggest investment banks had to say after the ruling. Bank of America: price target raised to $260 Bank of America lifted its price target to $260 per share from $250, implying upside of about 13%. "While details and nuances of the ruling and their implication on Apple are still to be determined, and Google has the option of appealing this decision, in our opinion, we do not see an immediate material change to the current Apple-Google relationship and payment structure. Longer-term, data sharing with other search engines/Gen AI providers could pose headwinds to Apple from lower Google TAC payments ... This ruling gives us more confidence in our Services revenue estimates which we model to grow 12% y/y in F26/F27. We est. 37% of Services revenue comes from Licensing of which Google TAC is a major contributor (22% of overall Services revenue)." Morgan Stanley "What we learned from Judge Mehta tonight should be viewed as the best-case outcome for Apple, and better than the 'most likely' Scenario 4 we highlighted in our prior analyses. Why? Because (1) GOOGL can continue to pay Apple to distribute search, (2) Apple can still set a default search engine (incl GOOGL) and receive payments for that, so long as Apple promotes other search engines and the default search engine is changed annually, and (3) Apple can -- but is not required to -- introduce a search choice screen to help recoup any change in payment terms related to the prior default search exclusivity Apple had with Google. Effectively, Apple needs to offer a bit more flexibility in distributing search to users, but the remedies are even more watered down than we expected." Baird "For AAPL, we suspect it could continue to receive significant distribution payments from Google and of course over time could also evaluate opportunities with emerging platforms like OpenAI, Perplexity and others as they build broader ad platforms." TD Cowen "We view the remedies as largely favorable for AAPL's advertising services business where third-party licensing agreements with GOOGL represent a low-20% of Service revenues and ~10% of total company gross profit. We believe GOOGL rev sharing could be in the low- $20B range despite Google search queries on the Safari browser declining for the first time due to the impact of GenAI chatbots on end user behavior." Goldman Sachs "Given Apple can continue to receive traffic acquisition cost payments from Google, we view this decision as positive for AAPL, which we estimate to have received nearly ~$23 bn in TAC revenue in F2024. Further, the court ruling provides insight into Gemini Commercial Agreements, which provide for payments from Google to smartphone OEMs and wireless carriers for the distribution of Gemini experiences on its devices. This reinforces our view that Gen AI app & experience distribution presents a new and growing revenue stream for Apple and the US wireless carriers -- similar to search TAC, but for Gen AI." Citi "The antitrust ruling on Google removes a major overhang and downside risk on the Apple stock. Google is allowed to continue to pay TAC fees to Apple for it to be set as the default search engine so long as the deal is not exclusive, which means Apple 1) can promote other search engines, and 2) can set a different search engine on different operating system versions or in a privacy mode and makes changes, if needed, on an annual basis. We believe this could change pricing and help Apple negotiate the deal annually." UBS "As part of the remedies proposed by the DOJ Google is prohibited from entering into or maintaining 'exclusive distribution agreements' covering Google Search, Chrome, Google Assistant and its GenAI products with partners including Apple on any device. However, Google will not be barred from making payments or offering other consideration to distribution partners for pre-loading or placement of Google products, effectively keeping the door open for Google to continue to pay Apple an estimated $20B to $25B annually." Evercore ISI "Google pays Apple $15-20B/year in order to be the default search engine on Safari and we estimate around 50% of this is U.S. based. Though worth noting there is a 'fixed' and 'variable' component to this that we don't know the split of. The payment is a revenue sharing agreement where Google shares a portion of the money it makes on advertising as a result of Safari searches. The rise of AI search options has raised concerns that revenue from this agreement will start declining given Apple's testimony in the case indicated Safari search volume declined in April for the first time ever. On the AI front, AAPL today does get paid from Open AI for the default status on the LLM front."

Jim Cramer Blasts Apple Naysayers, Claims Court Ruling Allows AAPL To Get Paid For AI, Not Pay For It - Alphabet (NASDAQ:GOOG), Apple (NASDAQ:AAPL)

CNBC's Jim Cramer launched a fiery defense of Apple Inc. AAPL on Wednesday, claiming a pivotal U.S. court ruling has fundamentally reshaped the tech giant's artificial intelligence strategy, allowing it to get paid for AI rather than funding an expensive catch-up. Check out the current price of AAPL stock here. Cramer Argues Apple Will Get Paid For AI In a series of posts on the social media platform X, Cramer blasted naysayers and argued that Wall Street is failing to grasp the "incredible importance" of the development for Apple's future. Cramer argues that Apple, long criticized for lagging in the AI race, no longer needs to spend a fortune to compete. Instead, he contends, a major AI player like Google will now pay Apple billions to integrate its technology, like Gemini, into Apple's vast ecosystem. "Instead of buying AI it will have a rich company pay IT to take that company's AI," Cramer stated, adding this negates fears of Apple writing a "$200 billion check to NVDA" for infrastructure. Judge Rules Against Forced Divestitures The catalyst for Cramer's analysis was a decision on Tuesday by U.S. District Judge Amit Mehta in the Department of Justice's antitrust case against Google. While the judge previously found Google held an illegal search monopoly, he rejected the DOJ's call to force a breakup of the company. Critically, Judge Mehta ruled that Google could continue its multi-billion-dollar payments to Apple to remain the default search engine on iPhones. See Also: Jim Cramer Says 'Apple Own It Don't Trade It' After Judge Allows Google To Keep Search Deal With iPhone Maker: Stock Jumps 3% After Hours Cramer Thinks That Market Reaction Was Muted The ruling sent Alphabet Inc. GOOG shares up 6.73% and Apple up 2.97% in after-hours trading. Cramer scoffed at the market's seemingly muted reaction to the news for Apple, posting. He dismissed recent negative stories about AI talent departing Apple as "plants," suggesting they are irrelevant now that the company has a clear path to monetize its platform through an AI partnership, turning a massive perceived cost into a significant new revenue stream. Price Action The stock fell 1.04% on Tuesday and rose 2.97% in after-hours. It has declined 5.79% year-to-date and was up 3.12% over a year. Benzinga's Edge Stock Rankings indicate that AAPL maintains a stronger price trend in the short, medium, and long terms. However, the stock scores poorly on growth rankings. Additional performance details are available here. The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, fell on Tuesday. The SPY was down 0.74% at $640.27, while the QQQ declined 0.84% to $565.62, according to Benzinga Pro data. On Wednesday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading in a mixed manner. Read Next: Google Ruling A 'Huge Win' For Big Tech, Says Dan Ives, Munster Labels Regulator's Bark 'Bigger' Than Bite -- Alphabet Stock Soars After Hours Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: jamesteohart / Shutterstock.com AAPLApple Inc$236.122.79%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum36.37Growth29.98Quality70.34Value8.99Price TrendShortMediumLongOverviewGOOGAlphabet Inc$223.275.32%QQQInvesco QQQ Trust, Series 1$569.150.62%SPYSPDR S&P 500$643.000.43%Market News and Data brought to you by Benzinga APIs

Apple Gets 'Home Run Ruling' In Google Antitrust Case: Analyst Says 'Monster Win' For Both Mag 7 Stocks - Alphabet (NASDAQ:GOOG), Apple (NASDAQ:AAPL)

Shares of both Alphabet Inc GOOGGOOGL and Apple AAPL are trading higher on Wednesday after a ruling from a U.S. judge. Analysts react to the favorable ruling for Alphabet and share why it's a big win for Apple: Wedbush analyst Dan Ives maintained an Outperform rating on Apple with a $270 price target. JPMorgan analyst Samik Chatterjee maintained an Overweight rating on Apple with a $255 price target. Bank of America Securities analyst Wamsi Mohan reiterated a Buy rating on Apple and raised the price target from $250 to $260. See Also: OpenAI's ChatGPT Ironically Helped Google Avoid DOJ Breakup As Judge Cites Generative AI Competition In Landmark Antitrust Ruling Wedbush: "Google and Apple just got a massive win from the courts ruling that the ongoing $20 billion search deal between the two stalwarts will remain and not be barred in its current form," Ives said. The analyst said the ruling was a "black cloud worry" for Apple investors, with the potential for the search deal between the giants to end. "This is a monster win for Cupertino and for Google it's a home run ruling that removes a [$25 billion] overhang on the stock." Apple and Google are likely to continue their search deal, and the companies could even "double down" with a larger AI-related partnership, Ives added. "We now see a green light for a bigger Gemini AI partnership between Apple and Google with this DOJ case now in the rear view mirror." JPMorgan: Tuesday's ruling for Google was "better than feared," Chatterjee said, saying it has only "modest headwinds," with exclusive deals not permitted going forward. "We view the ruling as removing an overhang from the shares with investors more concerned about larger disruption to the currently existing relationship with Google," Chatterjee said, expecting a "robust" agreement between the two tech giants to continue, even without exclusivity. Bank of America: Mohan wrote that there likely won't be immediate changes to the amount of revenue Apple gets from Google after the ruling. Users can change their default search engine in Apple settings today. That could mean no changes even with the judge barring exclusive deals for Google. The analyst said the ruling provides "more confidence" in Apple's Services segment in the future. AAPL, GOOL Price Action: Apple stock is up 2.6% to $235.58 on Wednesday. Its 52-week trading range is $169.21 to $260.10. Apple stock is down 3.4% year-to-date in 2025. Alphabet stock is up 8.3% to $228.88 on Wednesday. The company's stock hit new 52-week highs of $229.40 during the intraday session. Alphabet shares are up 20.9% year-to-date in 2025. Read Next: Jim Cramer Says 'Apple Own It Don't Trade It' After Judge Allows Google To Keep Search Deal With iPhone Maker: Stock Jumps 3% After Hours Image: Shutterstock AAPLApple Inc$236.092.77%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum36.37Growth29.98Quality70.34Value8.99Price TrendShortMediumLongOverviewGOOGAlphabet Inc$230.818.88%GOOGLAlphabet Inc$230.108.87%Market News and Data brought to you by Benzinga APIs

Dan Ives Says Apple And Google Could 'Walk Down The Aisle' On Bigger Gemini AI Partnership After Antitrust Win: 'Dream Scenario' - Alphabet (NASDAQ:GOOG), Apple (NASDAQ:AAPL)

Alphabet Inc.'s GOOG GOOGL Google should look for a new chapter in artificial intelligence collaboration with Apple Inc. AAPL after its courtroom victory over the Department of Justice, according to Wedbush analyst Dan Ives. Judge Clears DOJ Overhang For Google And Apple On Tuesday, U.S. District Judge Amit Mehta ruled that Google will not be forced to divest core businesses such as Chrome or Android, nor end its multibillion-dollar deal with Apple to remain the default search engine on iPhones. The decision removed what Ives called a "black cloud worry" hanging over both companies. "It's the dream scenario for Google. It's the dream scenario for Apple," Ives told CNBC's Closing Bell on Wednesday. "Because now they really get unleashed from an M&A perspective as well as ultimately what I and you look at that search deal ... this is now going to be really the next stage of growth." See Also: Ross Gerber Says Alphabet Stock Is 'Inexpensive': Analyst Cites 4 Factors Why Google-Parent Is Undervalued Compared To Mega Cap Peers Dan Ives Predicts Gemini AI Partnership Could Expand Ives suggested the two tech giants may move closer on AI following the favorable ruling. "Apple and Google, potentially could start to walk down the aisle in terms of a bigger Gemini partnership from an AI perspective," he said. Previously, Ives said that investors are likely to view this as a champagne moment. "This is a monster win for Cupertino and for Google, it's a home run ruling that removes a [$25 billion] overhang on the stock." Last month, it was reported that Apple approached Google about creating a custom Gemini AI model to power a revamped version of Siri as soon as next year. As per the report, Google has already started training the model, which would run on Apple's servers. Analysts See Major Win For Apple's Services Business Other Wall Street analysts echoed Ives' view that the ruling secures stability for Apple's lucrative Services segment. JPMorgan's Samik Chatterjee called the outcome "better than feared" and said it removes investor concerns about disruption to Apple's $20 billion-a-year search deal. Bank of America's Wamsi Mohan added the decision should bring "more confidence" to Apple's Services revenue. Google's Stock Outlook Improves As Valuation Gap Closes Alphabet shares continued to rally on Wednesday, with Class A up 0.34% and Class C up 0.35% in extended trading, according to Benzinga Pro. Ives raised his Google price target to $245, saying the stock could climb toward $300 as the DOJ overhang lifts and investors reward its AI strategy. "This is a stock that could have a three in front of it as we go into the next six months," Ives said on CNBC. Alphabet trades at a forward price-to-earnings ratio near 22, still a discount compared to Apple's multiple of about 30. Earlier, investment advisor Ross Gerber had called Alphabet undervalued, citing its investments in YouTube, Waymo and Gemini AI. Benzinga's Edge Stock Rankings indicate that GOOGL maintains solid trajectory across short, medium and long-term horizons. More in-depth performance insights can be found here. Read Next: Apple May See Fewer Searches In Safari, But Google CEO Sundar Pichai Insists AI Is Fueling Overall Query Growth: 'Far From A Zero-Sum Game' Photo Courtesy: Koshiro K on Shutterstock.com Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. AAPLApple Inc$238.143.66%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum36.37Growth29.98Quality70.34Value8.99Price TrendShortMediumLongOverviewGOOGAlphabet Inc$231.909.39%GOOGLAlphabet Inc$231.459.51%Market News and Data brought to you by Benzinga APIs