My assessment of Apple Inc. has been elevated to a strong buy following the September 2 ruling in the U.S. v. Google case, which is set to safeguard the highly profitable default search revenue stream. This legal outcome ensures the continuation of a substantial $20 billion in revenue for Apple.
This favorable ruling not only preserves a critical revenue source but also significantly bolsters Apple's negotiation leverage in future non-exclusive agreements. Furthermore, the anticipation surrounding the iPhone 17 renewal cycle is a key factor supporting this positive outlook. Projections indicate unit sales around 90 million for the second half of 2025, representing a 3.5% increase over the iPhone 16. A recent survey conducted in late August revealed that approximately 70% of current iPhone users in the U.S. are planning to upgrade, signaling strong demand for the upcoming model. While the stock's valuation is not considered low, the positive momentum from anticipated sales performance could easily offset current market skepticism regarding its AI capabilities. Despite a slight decrease of 60 basis points in the second quarter's gross margin and potential operational risks associated with manufacturing shifts to India and competitive pricing from Huawei in China, the overall forecast remains robust.
The sustained financial strength and consumer enthusiasm for new product cycles highlight Apple’s resilient market position. The company’s ability to navigate complex legal and competitive landscapes while maintaining strong product appeal underscores its fundamental value. The confluence of these positive developments suggests a promising trajectory for Apple, reflecting its capacity for continuous innovation and market leadership.