Apple (AAPL) stock is up more than 3% in regular trading at the time of writing. The surge follows a U.S. federal judge’s ruling that benefits both Apple and Alphabet (GOOGL). Yesterday, Judge Amit Mehta decided that Google can continue making payments to pre-install Google Search on Apple devices, rejecting major remedies that aimed to break Google’s dominance in online search. GOOGL stock is also up more than 8% today on the news.
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For context, the search deal between Apple and Google is worth nearly $20 billion annually, which makes up a meaningful share of Apple’s high-margin services revenue. By allowing these payments to continue, Apple avoids a potential hit to one of its most reliable and profitable revenue streams.
Apple currently gives Google Search the prime spot in the Safari browser across iPhones, iPads, and Macs. While users can switch to alternatives such as Microsoft’s (MSFT) Bing or DuckDuckGo, the default settings historically capture the vast majority of searches.
Here’s What the Judge Said in His Ruling
In his ruling, Judge Mehta wrote that Google will not be barred from paying partners like Apple or Samsung (SSNLF) to preload Chrome, Google Search, or GenAI products. He argued that stopping such payments could “cripple” distribution partners, limit innovation, and lead to fewer new products.
Having said that, Google is banned from entering into “exclusive” contracts that would make its services the default. However, it can still pay browser developers such as Apple and Samsung, though they are expected to promote other search engines as well.
Although Google plans to appeal the decision, the appeals process could take years. In the meantime, Apple continues to benefit from billions in search-related payments, adding stability to its services segment and reassuring investors. The decision safeguards one of Apple’s most profitable revenue streams, without forcing significant changes to iOS or Safari.
Is AAPL a Good Stock to Buy?
Analysts remain divided about Apple’s long-term outlook. On TipRanks, AAPL stock has a Moderate Buy consensus rating based on 16 Buys, 11 Holds, and one Sell rating. The average Apple price target of $238.93 implies 4% upside potential from current levels. Year-to-date, AAPL stock has lost nearly 8%.
