Apple App Store revenue ticks up despite falling downloads

Apple App Store revenue rose 0.6% year-over-year in the first 35 days of its fiscal fourth quarter to $3.4 billion, up from $3.38 billion in the same period last year, according to a note from Bank of America.

Total downloads across iPhone and iPad fell 4% year-over-year to 3.3 billion over the same stretch, while App Store dollars per download climbed 4.7% to $1.02, BofA said, citing data from SensorTower.

In July, App Store revenue grew 1.2% year-over-year globally, while downloads fell 3.9%, marking the first negative growth since April 2024. China revenue grew 8.7% year-over-year, continuing a trend of healthy growth over the past five months, while downloads there declined 6.8%.

BofA reiterated a Buy rating on Apple, citing strong capital returns, potential leadership in AI at the edge, and optionality from new products and markets. The bank's price objective stands at $380.

Analysts continue to view Services as a durable growth driver, pointing to Apple's Siri AI architecture, Apple silicon, and the Apple Upgrade Program as factors that should support the company's product-cycle flywheel and future hardware-led and AI-enabled monetization.

The bank models Services revenue growth of 10% year-over-year for the fiscal fourth quarter.

On AI apps, BofA noted that search-oriented AI apps continue gaining daily active user share against the Google Search app, excluding Safari and Siri. ChatGPT's monthly revenue exceeded $275 million in July, while Claude's revenue is rapidly catching up at roughly $65 million. Within gaming, BofA said Games revenue share declined year-over-year to 42% of total Ap...