Bank of America analyzes Apple's App Store restructuring: The rise of non-gaming apps and accelerated service transformation

According to the latest research report from Bank of America (BAC.US), Apple's (AAPL.US) App Store continues its growth trend in the third quarter of 2025, but its internal structure is undergoing significant adjustments. Bank of America maintains a "Buy" rating with a target price of $235 (corresponding to a projected price-to-earnings ratio of 29 times for 2026). The report, based on SensorTower and company data, reveals a complete picture of revenue growth, changes in user behavior, and potential risks.

Overall Revenue Performance: Global Growth of 11.5%, Gaming Share Falls Below 50%

During F3Q25, global revenue from the App Store reached $8.4 billion, a year-on-year increase of 11.5%, with the growth rate in June rising to 12%. Although gaming remains the largest revenue source (accounting for 45%), its share has continued to decline from a historical peak of over 50%, reflecting a trend of user payment habits shifting towards non-gaming areas. Entertainment (15%), Photography and Video (8%), and Social Networking (4%) make up the second tier, while productivity applications, with a year-on-year growth rate of 107%, have become the biggest highlight, showcasing the commercialization potential of utility software.

Regional Market Divergence: China Grows 4%, EU Grows Against the Trend by 21%

In major global markets, revenue in China grew by 4% year-on-year, below the global average; the EU market, however, stood out with a year-on-year growth rate of 21% in June, possibly related to the deepening of localized services and optimization of payment policies. In terms of downloads, global quarterly downloads reached 8.6 billion (+4.3%), but downloads in China fell by 0.8% to 1.488 billion, indicating that user base expansion has entered a plateau phase.

Application Ecosystem Restructuring: Utility Applications Surge, Sports Applications Decline

In segmented categories, productivity (107%), Graphics and Design (39%), and Utility Tools (30%) lead the charge, confirming the acceleration of monetization for enterprise services and efficiency tools. Photography and Video grew by 32%, reflecting sustained demand for short video creation; however, revenue from sports applications declined by 6% year-on-year, becoming the only category with negative growth. Although gaming still accounts for nearly half of the revenue, its share continues to compress, confirming the shift from "content is king" to "service is king."

Risks and Opportunities: Triple Challenges of Exchange Rates, Policies, and Competition

The report points out three potential risks: a strong dollar may suppress overseas revenue conversion; policy uncertainties such as the Epic Games case, although current SensorTower data shows no substantial impact; and intensified commoditization in the smartphone market, with the Android camp squeezing hardware profits through high-cost-performance models. However, Bank of America maintains a "Buy" rating with a target price of $235 (corresponding to a projected price-to-earnings ratio of 29 times for 2026), believing that the resilience of service business and ecological barriers can hedge against cyclical risks.

Investment Logic: Long-term Value from Hardware Dependency to Service Monetization

Apple is building a more balanced revenue structure through the App Store. The decline in the share of gaming is not a signal of recession but a reflection of ecological maturity. Once the user base reaches a ceiling, deep operation and high-value-added services will become the core driving force. Bank of America's analysis shows that even in a tightening regulatory environment, the App Store still maintains a growth rate of 12%, proving its position as the world's largest digital distribution platform is hard to shake