Demand for Apple’s Products Looks Strong despite Slower App Store Growth – Morgan Stanley

FomoAnxiety · 2026-03-20T18:15:56+00:00

Apple's App Store growth has slowed to 6% year-over-year, affected by declines in major markets. However, iPhone production is up 12%, indicating strong demand. Analysts maintain a Moderate Buy rating on AAPL stock, with a price target suggesting significant upside.

FomoAnxiety

2026-03-20 18:15:56

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Tech giant Apple AAPL -0.29% ▼ is seeing slightly slower App Store growth this month, although overall demand for its products still looks strong. According to data from Morgan Stanley MS +1.70% ▲ and Sensor Tower, App Store net revenue is currently growing by about 6% year-over-year through March 18, which is a slowdown compared to February. As a result, quarter-to-date growth is tracking around 7%, slightly below Morgan Stanley’s earlier forecast of 8% for the March quarter.

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Looking more closely, performance varies by region. Indeed, App Store revenue is up 4% year-over-year in China, but it has declined in other major markets, including a 2% drop in the U.S. and a 5% decline in Japan. Even so, the slowdown appears to be relatively modest and partly driven by tougher comparisons to last year, rather than a sharp drop in demand.

Nevertheless, iPhone production tells a more positive story. Apple built about 52 million iPhones for the quarter, which is up 12% from last year and suggests that stronger shipment volumes are ahead. In fact, based on historical trends, this level of production points to roughly 57 to 58 million shipments, which is in line with Morgan Stanley’s forecast and well above the 50 million expected by the broader market. Because of this, analysts believe iPhone demand remains strong, which could lead to upside in the coming quarters.

Is Apple a Buy or Sell Right Now?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on AAPL stock based on 14 Buys, nine Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $304.66 per share implies 22.5% upside potential.

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