Is Apple in serious trouble?

Last year, Meta Platforms, Microsoft, X (formerly Twitter),
Spotify, Match Group, and Epic Games, developer of Fortnite, objected to
Apple’s plan to charge fees for payments made outside the App Store. Then, in
February this year, Beijing suddenly became interested in Apple’s App Store
policies.

After losing a legal battle against Epic Games, Apple is
now obliged to allow developers to link to external payment methods, without
imposing fees or restrictions. Еhe story does not end here, as the company has
stated its intention to appeal the decision, but the process is obviously not
fast.

What does this mean for Apple’s profits?

The U.S. App Store alone brought Apple more than $10
billion in revenue in 2024. Overall, the App Store generates about $20 billion
annually through commissions. Therefore, if other countries follow suit by
challenging Apple’s practices, the impact on their profits could be even more
significant.

Still, Apple will likely reconsider its commission policy
to avoid losing large and medium-sized companies. However, it is too early to
say that Apple is in serious trouble or that the second quarter will be a
disaster. Other gains, such as higher
iPhone prices, could offset losses in one area.

Reports suggest that the next generation of iPhones could
cost more, but this would be due to new features and design improvements rather
than tariffs on imports from China (where
iPhones are assembled) or potential losses from lower App Store fees. It
certainly sounds implausible.

This is a good time for Apple product fans to save for the
new release in the fall. If demand holds steady with previous years, despite
the higher prices, it could boost Apple’s stock and return it to the spotlight
as one of the major market
movers.

What do analysts say?

Based on consensus valuations, 59% of analysts currently
rate Apple stock a “Buy,” 33.9% say “Hold,” and only 6.8% recommend “Sell.” The
12-month average price target is $227.30. As for where the optimism comes from,
given all the headwinds mentioned above, part of the answer lies in Morgan
Stanley’s survey.

According to the bank, Apple’s next wave of AI-based
features appears to resonate more strongly with U.S. consumers than expected.
In addition, among current iPhone users with access to Apple Intelligence,
willingness to pay for the service has increased 11% since last fall, reaching
an average of $9.11 per month.