Apple (AAPL) stock is modestly lower Tuesday after the European Court of Justices ruled that the tech giant must pay 13 billion euros (about $14.4 billion) in back taxes to Ireland.
The ruling stems from a 2014 investigation by the European Commission into Apple's tax payments in Ireland, according to CNBC. This led to a 2016 ruling that Apple received "illegal" tax benefits from Ireland over the course of two decades. After a series of appeals, the ruling was confirmed, which ordered Ireland to recover the back taxes.
"This case has never been about how much tax we pay, but which government we are required to pay it to," an Apple spokesperson told CNBC. "We always pay all the taxes we owe wherever we operate and there has never been a special deal. The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the U.S."
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In a filing with the Securities and Exchange Commission (SEC), Apple said it expects to record a one-time income tax charge of up to approximately $10 billion in the fourth quarter of its current fiscal year as a result of the ruling.
Is Apple stock a buy, sell or hold?
Apple stock has slightly lagged the broad market so far this year, up 15.2% on a total return basis (price change plus dividends) vs the S&P 500's 15.8% gain. But Wall Street remains bullish on the Dow Jones stock and isn't too concerned about the company's big tax bill.
Indeed, according to S&P Global Market Intelligence, the average analyst target price for AAPL stock remains at $237.99, representing implied upside of over 9% from current levels. Additionally, the consensus recommendation is Buy.
Financial services firm Wedbush is one of the most bullish outfits on the large-cap stock, which reiterated its Buy rating and $300 price target on Apple after Monday's iPhone 16 reveal.
"Today in Cupertino, Apple launched iPhone 16, which we believe will be the most successful iPhone unit launch in its history, as Apple Intelligence will be the launching pad for the consumer AI Revolution globally," says Wedbush analyst Daniel Ives said in a note yesterday following Apple's September launch event.
Ives adds that the "new era of personalization and how consumers interact with their iPhones has now begun," and he believes this will spark "a renaissance of iPhone growth (high-single-digit growth upside) for Apple over the next 12 to 18 months and drive shares higher with a $4 trillion market cap in 2025." AAPL's current market cap is closer to $3.33 trillion.
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