Apple licensing, services to drive sales; risk amid Google suit, BofA says
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Appleâs (NASDAQ:AAPL) licensing and subscription revenues are expected to drive near-term sales growth but there could be risk amid the antitrust case against Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Bank of America said.
For licensing, revenue tied to Safari payments (Google traffic acquisition costs) remains the main contributor, accounting for about 75% of that segment revenue in 2023. Ad revenue should accelerate within licensing, the firm said.
However, there is some risk from litigation as Googleâs payments to Apple and other device makers and wireless carriers are under scrutiny. 
Apple (AAPL) executive Eddy Cue testified last month in the antitrust case that the Google search engine is the best option for consumers. Cue, Apple's senior vice president of services, said that Apple (AAPL) uses Google across its devices because itâs the best. The Department of Justice's case against Google (GOOG) (GOOGL) alleges that Google's contracts to ensure its search engine is the default option on Web browsers and mobile devices is illegal. 
Bank of America, which is Neutral on Apple (AAPL) said that services revenue is slowing in 2023 from previous years, but should drive margins higher. The firm estimated 2023 services sales growth of 8% year-over-year compared to 16%, 27% and 14% in 2020, 2021 and 2022, respectively. 
Revenue for the App Store slowed in mid-2022 to early 2023 and is back to growth in part thanks to new games approved by the Chinese gaming regulator. The segment should continue to see growth with more users and an expansion of the portfolio including augmented and virtual reality.
Of Appleâs (AAPL) seven subscription services, iCloud and AppleCare+ remain the largest revenue contributors, followed by Apple Music. The firm modeled total subscription revenues of $28.7B this year, $31.6B in 2024 and $34.6B in 2025.
Still, the firm sees low double-digit growth of about 12% as sustainable for 2024 to 2026.
Shares are up 0.3% on Tuesday.

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