‘Apple Is Facing Some Serious Risks,’ Says Five-Star Analyst

Tech giant Apple (AAPL) is facing some serious risks to its high-margin Services business due to two major legal challenges: its ongoing court battle with Epic Games and the U.S. Department of Justice’s lawsuit (DOJ) against Google (GOOGL). Evercore ISI analysts, led by five-star analyst Amit Daryanani, pointed out that Apple earns $20–$24 billion per year from Google for making it the default search engine in Safari. About half of that is tied to U.S. traffic, which could be threatened by the DOJ’s case. The payment is based on a revenue-sharing model where Google splits advertising profits from Safari searches with Apple.

However, there are growing worries that this revenue stream could shrink. Indeed, Apple testified that Safari search volume dropped in April 2025 for the first time ever, potentially due to users exploring AI-based alternatives. At the same time, the DOJ is trying to force Google to sell its ad manager and exchange platforms in order to reduce its market dominance. If the court ultimately enforces these changes, Apple’s partnership with Google could be weakened and put billions of dollars in service revenue at risk.

Apple is also under pressure from its legal battle with Epic Games, the maker of Fortnite. The App Store, which brought in $96.17 billion in 2024, could see a drop in revenue if the court’s ruling stands. For reference, a judge recently decided that Apple must allow third-party payment options on iOS without taking a cut, which threatens the roughly $7 billion that Apple collects from U.S. developers. Interestingly, Evercore believes that the real earnings hit would be less than 6%. Nevertheless, it notes that the decision might still be overturned on appeal.

Is Apple a Buy or Sell Right Now?

Overall, analysts have a Moderate Buy consensus rating on AAPL stock based on 17 Buys, eight Holds, and four Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $228.65 per share implies 9.8% upside potential.

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