EU fine and shift to AI applying opposing forces to Apple's value, holding it steady

An analyst note suggests regulation from the EU and the $2 billion fine may put pressure on Apple's earnings per share, but its shift to AI will help keep the earnings multiple even at about 25x.

There's a lot of uncertainty surrounding Apple, thanks to multiple competing forces. All eyes are on Apple's push into AI after Project Titan was canceled, and the EU continues to take issue with Apple's business practices.

According to a note viewed by AppleInsider from JP Morgan, Apple's current 27x earnings per share is likely to be pushed down to 25x due to several factors surrounding the company. It emphasizes potential risk from regulatory scrutiny and the loss of a potential premium multiple due to entering the electric vehicle segment.

There's not much information beyond a summary of why these pressures exist. Earlier Monday, Apple was fined nearly $2 billion due to anti-steering practices in the EU deemed antitrust.

Apple is also in danger of further regulatory problems if the EU Commission isn't happy with its updates pertaining to the Digital Markets Act. At least 34 companies, including Spotify, have vocalized issue with Apple's proposed updates coming in iOS 17.4.

The Apple Car project is dead, removing a reason investors had viewed the stock as a premium. The shift to AI helps curb this disappointment, but Apple is still seen as behind in the space.

All of this adds up to JP Morgan seeing a more attractive opportunity to be around a 25x price-to-earnings ratio. The stock is still rated as Overweight at a $215 price target.