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Apple's App Store Rebounds: October Holds Key
10 Oct
Summary
- App Store revenue grew 5% in September, reversing August's flat performance.
- Full-quarter App Store growth was 2%, showing slow but steady improvement.
- Apple stock trades at a premium, requiring stronger growth than currently shown.
September marked an improvement for Apple Inc.'s App Store, with revenue rising 5% year over year, a notable increase from August's flat performance. For the entire quarter, App Store revenue saw a 2% increase, continuing a trend of low-single-digit growth. Analyst David Vogt of UBS suggests that easier year-over-year comparisons contributed to September's stronger results.
October poses a more significant challenge, with more difficult comparison periods expected. This comes alongside the implementation of new App Store regulations in the EU, a region accounting for over 10% of the trailing twelve-month revenue. Apple's ability to sustain its stock's premium valuation, currently at 37.69x forward earnings—a 28% premium to its 5-year average—depends on future growth, potentially driven by new device releases.
Hedge fund interest in Apple has remained stable, with 169 funds holding positions at the end of Q2 2026, and short interest is low. While September's App Store rebound offers some optimism, UBS cautions that one month's performance is insufficient to fully support the stock's premium valuation, making October's results critical for investors.
