Apple and Alphabet Are Especially Scared of a Blue Wave
Apple and Alphabet just posted record quarters, but a single election outcome could gut the profit streams funding their biggest bets. Here is why the political calendar may matter more than the earnings beat.
Both Apple (NASDAQ:AAPL | AAPL Price Prediction) and Alphabet (NASDAQ:GOOGL) posted record summer quarters. Now each heads into a midterm election that could change the rules it works under. Apple’s growth came from a 22% jump in iPhone sales. Alphabet’s came from 82% Cloud growth. Polymarket prices Democratic control of the House at 0.905, so the political risk behind those results is worth a close look.
iPhone Upgrades Carry Apple as AI Demand Carries Google Cloud
Apple’s fiscal Q3 revenue reached $109.42B, up 16.4%. EPS of $2.02 beat the $1.89 consensus, which shows how strong the iPhone 17 cycle has been. Tim Cook said demand exceeded Apple’s own plans: “It’s a demand forecast issue, to be candid.” Apple expects supply constraints to get worse this quarter, and memory costs are still rising.
Alphabet’s Q2 revenue rose 24.2% to $119.80B. Google Cloud brought in $24.77B, and Search grew 17% as AI features drove more queries. Pichai noted that “nearly 90% of the Fortune 100” use Gemini Enterprise. Look past the $9.11 EPS figure, though. A $99.03B gain on equity holdings ballooned it.
| Pressure Point | Apple | Alphabet |
|---|---|---|
| Business at Risk | Services, $30.74B | Search, $63.27B |
| Legal Fight Already Underway | App Store link-out ruling, appeal headed to the Supreme Court | Scrutiny of search, ads, Android and Chrome |
| Shareholder Returns | $25.8B in quarterly buybacks | Buybacks suspended |
Antitrust Threatens the Businesses That Generate the Most Cash
Apple’s Services gross margin was 75.6%, which makes App Store fees its most valuable profit stream. That stream is already contracting under EU rules and a U.S. court ruling. A Democratic Congress could bring back app-store legislation and add to that pressure. Trade policy is less of a worry for Apple. About two percentage points in tariff refunds raised gross margin, which leaves Services as Apple’s biggest political exposure.
Alphabet’s risk is about funding. Search profits pay for AI spending that reached $44.92B in a single quarter. Free cash flow fell to -$5.86B, and long-term debt rose from $46.5B to $98.2B. Antitrust action aimed at search distribution would cut into the cash that pays for the AI expansion. It would hit Apple too, because Google pays Apple to be Safari’s default search engine.
Senate Results Will Decide How Real This Risk Becomes
Traders put Democratic Senate control at 0.645. That number matters because the Senate is where new legislation would pass or stall. For Apple, I will be watching Services growth, which was 12% last quarter, and the result of the Supreme Court appeal. For Alphabet, the key question is whether its Cloud backlog of more than $460 billion turns into revenue fast enough to cover $175 billion to $185 billion in 2026 capital spending.
Why I Lean Toward Alphabet Even With More Antitrust Risk
Apple trades at about 45 times earnings after a 26.15% gain this year. In my view, that price leaves little room for a hit to Services. Alphabet trades near 16 times earnings and is up only 11.79% this year. That looks like more room to absorb bad news to me, but its rising debt remains a concern. I would rethink that position if a Democratic Senate moved quickly on legislation to break up search.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
