Apple's App Store Shows Resilience as Gaming Slumps, Evercore ISI Maintains Bullish $330 Target

Amid a market intensely focused on artificial intelligence plays, Apple Inc. (NASDAQ: AAPL) remains a core holding for many analysts, with its services business under constant scrutiny as a key growth engine. On Friday, Evercore ISI analyst Amit Daryanani reiterated an Outperform rating on the tech giant, maintaining a $330 price target.

The firm's latest analysis points to a nuanced picture for Apple's pivotal App Store. January revenues grew 7% year-over-year, a slight acceleration from December's 6% growth. However, the headline figure masks a significant divergence beneath the surface.

Gaming, historically the App Store's largest revenue segment, posted its third consecutive month of annual decline. Evercore ISI attributed the weakness to broad-based pressure in major markets including China, Japan, the United States, and South Korea.

"The gaming slump is a clear concern," said Michael Thorne, a portfolio manager at Horizon Capital. "It's a high-margin category, and prolonged softness, especially in China, could start to weigh on investor sentiment regarding the services growth narrative."

Offsetting this drag was robust performance in other categories. Revenues from music, photo and video, social networking, and entertainment applications all grew at a double-digit annual pace. This helped drive a 17% year-over-year increase in aggregate revenues for the non-gaming categories tracked by the firm.

"This is the real story," countered Sarah Chen, a tech analyst at Veritas Insights. "It demonstrates the App Store's evolution beyond gaming. The strength in creative and social apps shows the platform's health is diversifying, which ultimately reduces reliance on any single vertical and de-risks the model."

Geographically, U.S. App Store revenues grew an estimated 3%. Revenues in Apple's second and third largest markets, China and Japan, saw a slight estimated decline of 1% year-over-year.

The report arrives as Apple, often categorized among "AI stocks" due to its chip advancements and rumored generative AI projects, faces questions about its near-term growth drivers. Evercore's sustained bullish stance suggests confidence in the company's ability to navigate sector-specific challenges through its expansive ecosystem.

"Frankly, the constant 'AI stock' label for Apple feels like a distraction," offered a more pointed David K. Miller, an independent market commentator. "The real issue is saturation and innovation fatigue. Services growth is slowing, hardware cycles are incremental, and until they show a truly disruptive new product or service, the stock is trading on financial engineering, not fundamental excitement."

Apple's broader financial performance, with its industry-leading margins and massive installed base, continues to provide a floor for the stock. The focus now shifts to whether the positive momentum in non-gaming app categories can sustainably counterbalance the pressures in the gaming sector.