BofA update shows where active managers are putting money
Investing.com - BofA Securities has reiterated a Buy rating and $240.00 price target on Apple (NASDAQ:AAPL) despite potential revenue risks related to Google search payments. According to InvestingPro data, Google parent Alphabet (NASDAQ:GOOGL) maintains a strong financial health score of "GREAT" with solid revenue growth of ~13% over the last twelve months.
The firm’s analysis suggests Apple could lose approximately half of the $20 billion+ annual payment it receives from Google if legal rulings prohibit Google from paying Apple for search-related arrangements.
BofA Securities believes such a ruling would likely apply only in the United States due to court jurisdiction limitations, allowing Apple to continue receiving payments for search traffic sent to Google from other countries.
The firm estimates that the potential $10 billion+ loss would represent approximately 8% of Apple’s annual operating profit dollars.
The Google payments are currently accounted for as part of Apple’s Services revenue as Google TAC (Traffic Acquisition Costs) and have a high contribution to the bottom line as they function as royalty-type payments.
In other recent news, Google has launched Deep Think for Gemini app Ultra subscribers, offering advanced problem-solving capabilities. This feature is a faster, consumer-friendly version of the model that excelled at the International Mathematical Olympiad, achieving Bronze-level performance in internal tests. Additionally, Google announced its intention to sign the European Union’s General Purpose AI Code of Practice, despite expressing concerns about potential impacts on AI development in Europe. The company joins other U.S. firms in supporting the initiative aimed at enhancing AI system security and quality across the region.
Google is also introducing new AI Mode features in its Search platform, designed to assist students, parents, and educators during the back-to-school season. These updates include the ability to ask questions about images on desktop browsers, with plans to support PDF uploads and Google Drive integration soon. Meanwhile, Avis Budget (NASDAQ:CAR) Group has entered a strategic partnership with Waymo to launch an autonomous ride-hailing service in Dallas, with Avis providing essential fleet operations support. Lastly, JPMorgan has reiterated its Overweight rating for Alphabet, maintaining a price target of $232.00 as investors await a significant legal decision regarding a search commercial agreement case.
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