Analysts mostly nonplussed by DoJ suit, and believe Apple will win

The Department of Justice case will hang over Apple for years

The Department of Justice suing Apple has made headlines around the world, with initial reports all emphasizing the accusations. Beyond the first news reports, though, the news cycle has moved on to analyzing the details.

As you'd expect, in notes seen by AppleInsider and in interviews on television, stock analysts and investment firms have been examining the allegations. They are mostly coming to the same conclusions.

Gene Munster

Analyst Gene Munster says that he believes the DoJ is really targeting Apple's Services division, which he describes as the juiciest part of the company's profits.

Munster points out that Apple is far from the first firm to be sued by the DoJ, which he says is doing its job of working to keep large companies in check. But ultimately he thinks this particular case will come to little.

That's partly because any regulation of large companies is difficult. However, it's also because despite the DoJ treating Apple as a bad actor forcing people to buy its products, the truth is that users are happy with Apple's devices.

JP Morgan

Investment firm JP Morgan says that the DoJ's suing Apple is hardly unexpected, but that the scope of the suit was surprising. Attacking Apple on so many fronts means that it will take more company effort to refute the accusations, and it will hang over its work for years.

Then having a very broad attack on Apple's businesses, also means that a clear result is unlikely to be quick. JP Morgan analysts are now cautioning investors that any outcome is at least three years away.

They also argue that in the shorter term, the focus for investors should be on Apple's AI-led upgrade cycle.

TD Cowen

TD Cowen thinks a trial may not begin until the second half of 2026, based on how long similar cases have taken against Amazon and Google. In this case, it thinks that the impact of any future regulations on Apple will be minor, but in the short term, investors selling stock could be more of an issue.

"At this juncture, the lawsuit does not appear to represent an existential threat to AAPL in the same vein as historic... cases," say the TD Cowen analysts in a note seen by AppleInsider, "though investor concerns over LT impairments or share loss for the high margin services business could be a headwind for the stock."

Ritholtz's Josh Brown

"It's really tough to prove true consumer harm," Josh Brown of investment firm Ritholtz, said on CNBC. "Nobody has a gun to their head to choose Apple over Android... it's consumer preference and they continually signal that they're happy and they want more."

Brown also expects the case to take two or three years. Despite that, he doesn't foresee it causing Apple much difficulty — and says he has no intention of selling Apple stock because of this case.

Satori Fund

Satori Fund's Dan Niles says that he expects that the drop in shares after the announcement will be followed immediately by a rise as investors heed advice to stick with Apple. This drop and rise will be enough that Niles believes share owners could benefit from shorting Apple.

Overall, Niles says that selling stock because of the DoJ case is nonsense, because it will take years before there is any conclusion.

He does, though, argue that there are other reasons to sell. He says those include how Apple has already lost a suit against Epic in Europe, and that App Store rates have come down.

Clockwise Capital

James Cakmak, partner and portfolio manager at Clockwise Capital, is similarly critical of Apple but agrees that the DoJ case is not going to hurt the company.

Cakmak expects that eventually Apple will have to pay a fine, and that it will be a sum in the billions. However, he sees that as a non-issue, given Apple's profitability.

He does think that the ongoing case could prove to be a drag on Apple's growth, but he says that the firm is already facing growth challenges.

Jim Cramer on CNBC

"Mad Money" presenter Jim Cramer reported that investors selling sales meant that Apple's stock went down just over 4% after the DoJ's announcement. However, he then shredded the DoJ's suit.

"I just got a whole brand spanking new reason to buy Apple, don't trade it," he said. "I know a loser case when I see one, and the United States of America versus Apple is a loser."

On Friday morning's show, Cramer continued his tirade against the suit, focusing on the DoJ's strange performance smartphone market segment focus.

What happens next?

As yet, there no timescale has been announced for the next steps in the process. However, Apple is likely to start by seeking a dismissal of the DoJ's case.

In the meantime, investors themselves aren't so convinced. Shares dropped 4.1% on the initial news of the lawsuit. That means Apple valuation dropped by about $113 billion.

There are signs that Dan Niles's prediction that the stock would recover will be correct, though. A day after the announcement, Apple's shares are back up 0.6% in pre-market trading on Friday morning.