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On Monday, Goldman Sachs maintained a positive outlook on Apple Inc. (NASDAQ:AAPL) shares, reiterating a Buy rating and a price target of $294.00. According to InvestingPro data, Apple currently trades at $242.69, with analyst targets ranging from $197 to $325. While the stock has delivered an impressive 35% return over the past year, InvestingPro’s Fair Value analysis suggests the stock may be trading above its intrinsic value, landing it among other tech stocks on the most overvalued list. The firm’s analyst highlighted that Apple’s App Store spending in February 2025 saw a year-over-year increase of 9%, leading to a 13% rise in the first quarter to date, based on data from Sensor Tower. This growth outpaces the consensus estimates for Apple’s second fiscal quarter of 2025 Services revenue, which was projected at 12% year-over-year by FactSet, aligning instead with Goldman Sachs’ own forecast of a 13% increase.
Apple’s App Store, which is estimated to account for 25-30% of the company’s Services revenue, generated $6.098 billion in global net revenue for February 2025, marking a 9% increase from the $5.612 billion reported in the same month the previous year. This growth contributes to Apple’s overall robust financial health, reflected in its "GOOD" rating from InvestingPro. The company’s total revenue stands at $395.76 billion for the last twelve months, with a healthy gross profit margin of 46.5%. This growth contrasted with a 1% decline in Google (NASDAQ:GOOGL) Play Store’s net revenue, which fell to $2.485 billion from $2.506 billion year-over-year. Combined, February’s app spending reached $8.583 billion, a 6% increase from the previous year’s $8.119 billion.
Despite a slowdown in growth from 18% year-over-year in January to 9% in February, the combined app spending for the first quarter of 2025 is still up by 13% year-over-year. This matches Goldman Sachs’ projections for Apple’s March quarter Services revenue growth and is slightly ahead of the wider market’s expectations. Apple’s own guidance for its second fiscal quarter of 2025 indicated a low-double-digit Services revenue growth, even considering a 250 basis point impact from foreign exchange headwinds.
The deceleration in February 2025 was widespread across categories but was most notably seen in the Games category. Spending on Games, which constituted 49% of App Store revenue in February, decreased by 2% year-over-year, a significant drop from the 14% growth observed in January.
Regionally, the United States saw a 7% year-over-year increase in App Store spending in February (11% for the first quarter to date), China experienced a 3% rise (10% for the quarter to date), and the European Union reported a 16% surge in February (20% for the quarter to date). These figures suggest a varied performance in different key markets for Apple’s App Store. With 22 analysts recently revising their earnings expectations downward for the upcoming period, investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which provides detailed analysis of Apple’s performance across global markets and its future growth potential.
In other recent news, Apple is anticipated to face an antitrust fine from the French regulator concerning its App Tracking Transparency (ATT) feature. This decision, expected next month, represents the first regulatory veto against ATT, which has been controversial among digital advertising and mobile gaming companies. Meanwhile, Apple is set to begin selling iPhone 16 models in Indonesia after reaching an agreement with the local government. This development follows the establishment of an Apple manufacturing plant and a research and development center in the country.
Furthermore, Apple CEO Tim Cook has hinted at an upcoming announcement related to the company’s ’Air’ product line, generating interest among tech enthusiasts. In another development, Spotify (NYSE:SPOT)’s CEO, Daniel Ek, has accused Apple of not adhering to the European Union’s Big Tech rules, urging regulators to enforce the Digital Markets Act. Additionally, former U.S. President Donald Trump has called for Apple to abolish its diversity, equity, and inclusion policies, despite shareholder support for maintaining them. These recent developments highlight the various challenges and opportunities Apple is currently navigating.
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