Apple services growth likely to accelerate from September quarter - Morgan Stanley

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By Senad Karaahmetovic

Morgan Stanley analysts have weighed in on Apple’s (NASDAQ:AAPL) Services business after the latest disclosures from Sensor Tower.

Based on this data, Morgan Stanley estimates that App Store net revenue increased 1% Y/Y in the month of December, which would mark the first period of growth in six months. As a result, the analysts estimate that the December quarter App Store net revenue reached $6.3 billion while the Services segment generated $20.8B.

While this projection is above Morgan Stanley’s estimate of $20.5B, it is still below Street’s $20.9B projection.

“We believe Services growth is likely to accelerate from September quarter growth of +5.0% Y/Y, an important inflection after 5 quarters of decelerating Services growth. Looking forward, we forecast App Store net revenue growth accelerating for each quarter of FY23, as 1) App Store Y/Y compares ease and spending trends normalize, and 2) Apple benefits from price hikes taken in October 2022 in a number of international markets,” they said in a note.

As a result, the analysts are “encouraged” that App Store’s growth trajectory continues to improve after bottoming in September.

As of 10:50 EST (15:50 GMT), Apple stock price is down 3.3% on the day.