Initial read of DOJ’s Google case negative for Apple, says Barclays

Barclays says that while Apple (AAPL) is not directly involved in the Department of Justice’s case against Google (GOOG, GOOGL), the outcome could have a meaningful impact on its model. While the initial read is fairly negative for Apple revenues and earnings, there will likely be changes, and Apple could back fill lost revenues with its own advertising stack over time, the analyst tells investors in a research note. Barclays estimates the “high margin” Google traffic acquisition cost revenues represented about 15% of operating income for Apple in fiscal 2024, noting it could be higher since there is no meaningful disclosure on this business. However, the firm expects “several layers of appeals which could take a few years to settle” the DOJ case. Further, would have the opportunity to make up any lost revenues over time with a further build out of its own ad network, and potentially a search engine, adds Barclays. It has an Underweight rating on Apple shares with a $184 price target.