Apple’s App Store growth is reaccelerating

Services is much more than App Store

Apple’s App Store revenue growth is strengthening in February, with Morgan Stanley saying the latest data points to a faster pace of expansion heading into the March quarter.

The firm’s analyst, Erik Woodring, said in a note Monday that App Store net revenue is growing 9 percent year-over-year month-to-date, which represents “a 230bps acceleration from January off a 700bps easier Y/Y compare.”

Woodring added that quarter-to-date revenue is now rising 7.5 percent, putting it “50bps behind our +8.0% Y/Y March quarter App Store forecast.”

The bank kept its March-quarter App Store growth and Services growth forecasts unchanged at 8 percent and 13.5 percent, respectively.

Morgan Stanley said the acceleration is broad-based across major markets. China’s App Store is growing 4 percent year-over-year after a decline in January, while the U.S. is rising 3 percent, a 40-basis-point improvement. Japan is down 1 percent, while the rest of the world is seeing 22 percent growth.

The analysts also cited rising Mac lead times, noting they have “quickly inflected to multi-year highs” due to demand for the on-device AI tool OpenClaw.

They said stronger Taiwan component supplier revenue in January is another positive indicator, pointing to “very robust strength in server demand coming from the largest global cloud service providers.”

Source: Yahoo Finance

NB:     With new products due in a few days...

NB:     ... the product revenues should accelerate nicely into the end of quarter. Services are more predictable as they attach to installed base whereas products attach to launch cycles. The note about Mac growth is interesting. OpenClaw has been quite a surprise and it shows once again that, as during the Covid tech boom, when tech is growing, Apple is booming. The smartest product you'll have is a smartphone and the smartest smartphone will be the iPhone.