Apple slips as analysts dissect App Store revenue growth in May
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Apple (NASDAQ:AAPL) shares slipped on Wednesday as several analysts dissected App Store revenue growth last month, led by gaming.
Bank of America analyst Wamsi Mohan, who has a buy rating on Apple (AAPL) shares and a $200 price target, noted that the global App Store grew 4% year-over-year in May, China grew 3% year-over-year and revenue quarter to date is up 6% year-over-year (through May 31) to $4.8B, citing data from Sensor Tower.
Gaming continued to be strong, seeing double digit growth in China, followed by entertainment, photo and video, social networking and health and fitness. 
"We note that app store compares get materially easier over the next several [quarters] that can drive a re-acceleration," Mohan wrote in a note to clients.
The analyst added that services revenue growth is expected to be aided by advertising, Apple Care and its existing services, such as TV+, Fitness+ and Arcade scaling in both user content and features. 
Apple (AAPL) shares fell slightly more than 1.5% to $133.57 in premarket trading.
Also discussing the Sensor Tower data, several analysts from Morgan Stanley noted the continued "underperformance" in App Store revenue, comes on the back of "harder" year-over-year comparisons and COVID re-openings, estimating that App Store net revenue is up 5% year-over-year through June 20.
"Overall, this deceleration is not overly surprising as the [year-over-year] compare for the month of June is 3 points harder vs. May," the analysts, led by Erik Woodring, wrote in a note.
In the note, Morgan Stanley also cited the recent outperformance of the iPhone in China.
On Tuesday, investment firm UBS said Apple's (AAPL) iPhone shipments in China surged in May, up 13% year-over-year, even as overall smartphone shipments fell 9% year-over-year.
Wedbush Securities recently reiterated that Apple (AAPL) is one of its top three stocks in the tech sector, reminding investors to focus on "secular winners."