• UBS (UBS) reiterates Neutral rating and $296 price target on Apple (AAPL), citing persistent App Store weakness.
  • September App Store revenue rose 5% year-over-year, but that follows a 2% gain for the September quarter, marking a second straight quarter of low-single-digit growth.
  • U.S. App Store revenue fell roughly 7% year-over-year, while international markets grew about 7%, underscoring a stark geographic divide.

UBS Stays Cautious

UBS isn’t buying the bounce. The investment bank reiterated its Neutral rating and $296 price target on Apple, even as App Store revenue growth improved to 5% year-over-year in September. For the September quarter, App Store revenue grew just 2% year-over-year, according to the UBS note — a second consecutive quarter of low-single-digit growth that suggests a slowdown rather than a convincing recovery.

The weakness is concentrated in the United States. U.S. App Store revenue fell roughly 7% year-over-year, while the rest of the world grew about 7%, a split that raises questions about whether American consumers are pulling back on app spending or simply shifting to alternative payment channels.

A Mixed Picture for Services

App Store growth shouldn’t be conflated with Apple’s entire Services division, which includes iCloud, Apple Music, Apple Pay, and advertising. In the June quarter, Services revenue rose 12% year-over-year to $30.7 billion, according to earnings-call coverage. That’s a much healthier clip than the App Store’s low-single-digit growth, though it remains unclear whether the App Store drag will continue to weigh on the segment.

UBS’s cautious stance isn’t new. In July, the bank highlighted slowing June-quarter App Store growth and anticipated an easier year-over-year comparison for September. The latest figures suggest that easier comparison hasn’t produced a substantial rebound.

Regulatory Clouds Gather

The timing is delicate. Apple is navigating a shifting regulatory landscape for app distribution and payments, particularly in Europe. New EU fee terms announced in August took effect October 1 — after the September period described in the UBS note. Under the new framework, apps distributed through alternative marketplaces or the web face a 5% Core Technology Commission on digital transactions, while App Store apps using alternative payment processing face a 20% commission, potentially reduced to 10% under the small-business program. Apple eliminated previous initial acquisition and store services fees.

The company said the changes would resolve its disagreements with the European Commission, which welcomed them but said it would monitor implementation. Epic Games called the new commissions “junk fees” and argued they would not deliver the competition intended by the Digital Markets Act. The dispute over whether Apple has meaningfully opened its ecosystem remains unresolved.

Separately, regulators in Japan and Brazil have also pursued changes to Apple’s App Store model, raising the prospect of further modifications to how the company collects revenue from app distribution.

Leadership Transition Adds Uncertainty

The App Store figures arrive as Apple undergoes a leadership transition. John Ternus became CEO on September 1, succeeding Tim Cook, who moved to executive chairman. Apple described the transition as a planned succession.

Reuters (TRI), citing Bloomberg, reported on September 29 that Ternus was considering fewer management layers, more frequent product launches, and a stronger engineering focus. The report also described reductions in hardware program-management roles and teams associated with Siri, Vision Pro, and AI software. These are reported initiatives, not a fully announced restructuring plan, and Apple has not confirmed them.

The Bigger Picture

Apple’s overall business continues to grow strongly. In the June quarter, revenue rose 16% year-over-year to $109.4 billion, diluted earnings per share climbed 29% to $2.02, and gross margin came in at 50.1%. The active-device installed base hit a record high across major product categories and geographic segments.

But tariff refunds added roughly two percentage points to gross margin and $0.11 to EPS, meaning the headline profit improvement wasn’t entirely operational. Currency headwinds also weighed on Services growth, according to earnings-call coverage.

The key question now is whether September’s 5% App Store growth can persist. One stronger month does not overturn a weak quarter, especially when UBS previously expected an easier comparison period. The bank’s Neutral rating and $296 target reflect caution rather than a forecast of imminent collapse.

Apple’s own outlook for the September quarter calls for company revenue growth of 9%–11%, underscoring that App Store weakness should not be read as equivalent to weak growth across the entire company. The next data point will be Apple’s reported September-quarter results, which will show whether Services growth holds up and whether the App Store slowdown deepens.

Correction: An earlier version of this article misstated the September-quarter App Store growth rate. It was 2% year-over-year, not 5%.