Huge News for Apple Stock Investors

Key Points

• In the Google antitrust ruling, it was deemed permissible for Apple to receive payments from Google Search to make it a default search engine on its web browser.

• This payment makes up a sizable portion of Apple's earnings.

• Apple is in a better place financially because of this ruling, but the stock remains expensive.

• 10 stocks we like better than Apple ›

A huge risk was just eliminated for Apple (NASDAQ: AAPL). In a landmark antitrust case United States vs. Google LLC, a federal judge finally ruled on the remedies for Google's monopolistic behavior. The remedies were much smaller than Wall Street expected.

Alphabet (NASDAQ: GOOG) can keep its Chrome web browser and Android mobile operating system, which will help maintain its broad ecosystem of consumer products. The judge said that with rising competition from artificial intelligence (AI) services, it was not in the best interest of the country to break up Google's consumer services.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

How does this relate to Apple? As a part of the ruling, it was decided that Google Search could keep making payments to Apple to make it a default choice on the iPhone and other Apple hardware, although it could not make any exclusive deals going forward. Here's what the ruling means for Apple and whether the stock is now a buy for your portfolio.

Apple's cash cow gets formal approval

Apple stock is up 3.8% in the day following this court ruling, and for good reason. Google Search pays Apple a reported fee of more than $20 billion each year to make its search engine the default option on the Safari browser. This deal has been in place for years, helping Google Search retain 90%+ market share in search for the last decade.

It only recently came under scrutiny as anticompetitive. Confusingly, in 2024 the federal courts ruled that Google Search was a monopoly, and that part of its monopolistic behavior were these default payments to Apple and other hardware makers to make Google Search a default option on web browsers. However, in the time since the initial monopoly decision, growth of AI chatbots and browsers have upended the competitive landscape, at least according to the judge. Large competitor OpenAI is now valued at $500 billion, which is already 20% of Alphabet's current market cap.

Seeing this increase in competition, the judge decided to take a tame approach to Alphabet's supposed monopoly, with no huge remedies decided. Apple's payment from Google is a large portion of its operating earnings given that it comes with close to zero costs as a licensing deal. Over the last 12 months, Apple's operating profit was $130 billion. A $20 billion payment from Google would make up over 15% of these earnings. Now, Apple can keep this cash cow coming for the foreseeable future, as long as Alphabet keeps playing ball and feels the deal is worth it.

What's next for the iPhone maker?

This ruling is huge news for Apple, although it is not necessarily a positive for the business but more about avoiding a huge immediate loss. Like every other technology company, Apple is trying to navigate the choppy AI waters and how it could potentially disrupt its operations.

According to reports -- and confirmed by the lack of product releases -- Apple is struggling to develop AI tools that match OpenAI, Alphabet, or Anthropic and is losing a ton of AI talent to these competitors. Apple still maintains a dominant position with the iPhone, but any investor looking for growth due to AI software developed by Apple is likely to be disappointed. It is reported that Apple is exploring AI-powered web search along with its Siri chatbot that could be powered by Alphabet's AI technology, although no products have been formally announced.

AAPL PE Ratio data by YCharts

Apple stock is still expensive

Looking at the big picture, Apple has transitioned from a hypergrowth company to a period of stagnation. With a failure to develop a new flagship product after the iPhone, Apple's revenue growth has slowed along with the maturity of the iPhone market. Its software services business has grown steadily in recent years, but this is also associated with smartphones as it earns revenue from the App Store and its Google Search licensing deal.

To quantify this slowdown, Apple's revenue is only up a cumulative 3.6% in the last three years. For comparison, Alphabet's has grown a cumulative 32% over that same timeframe, and has come out with the plenty of innovations in AI along the way.

Despite this weak growth, Apple's stock trades at an expensive price-to-earnings ratio (P/E). It has a P/E ratio of 36 compared to Alphabet's 25. Any investor looking for the best stock to buy after this Google antitrust ruling would be smart to buy Alphabet stock over Apple because of its faster growth and cheaper earnings ratio. Apple remains a good business, but one that is trading at too high of a P/E ratio compared to its growth prospects.

Should you invest $1,000 in Apple right now?

Before you buy stock in Apple, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $661,268!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,045,818!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 184% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 25, 2025

Brett Schafer has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.