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Apple's China Challenge: Wedbush Bullish Despite App Store Probe

Wedbush has reiterated its "Outperform" rating for Apple Inc. (AAPL), setting a 12-month price target of $325, based on a sum-of-the-parts (SOTP) valuation. The report highlights potential regulatory challenges as Chinese regulators consider probing Apple's App Store fees and policies, a move seen as part of broader US-China tech tensions. Despite these concerns, Wedbush believes the risk is contained, emphasizing that Apple's revenue exposure from China is limited, with approximately $5 billion annually from App Store activities in the region.

The report underscores CEO Tim Cook's strategic navigation of US-China relations, suggesting that Apple's growth in China could resume by the June quarter. "Cook is 10% politician and 90% CEO," Wedbush notes, highlighting his ability to manage tensions and maintain strong ties with Beijing. The report also points to the broader geopolitical landscape, including US tariffs and trade negotiations, as factors influencing Apple's market dynamics.

Apple's current stock price is $227.90, down 2.1% from the previous close of $232.80.